Hyundai-Kia see weakest sales growth in eight years

Hyundai and Kia’s combined deliveries will increase 4.1 per cent to 7.86 million vehicles in 2014.

A model poses next to a Hyundai Tucson. Seoul-based auto firm plans to increase sales by 3.8 per cent to 4.9 million vehicles this year, while Kia targets to deliver 4.7 per cent more at 2.96 million units. — AP

Hyundai Motor and Kia Motors, South Korea’s two largest automakers, forecast their weakest sales growth in eight years as competition intensifies and the stronger won hampers exports. The shares fell.

Hyundai and Kia’s combined deliveries will increase 4.1 per cent to 7.86 million vehicles in 2014, according to comments made by Chung Mong Koo, chairman of both automakers, to employees during a new year address in Seoul today. That’s the slowest growth since 2006 and falls short of the eight million units projection based on the average estimate of five analysts surveyed by Bloomberg News.

Chung, 75, said the companies will invest in improving vehicle safety and technology as competition gets fiercer and the global economy reaches a “low growth era.” The forecast comes days after Hyundai announced a leadership change in the US, where sales have slumped as the won appreciated more than any major Asian currency in the past six months, gaining about eight per cent against the dollar and 13 per cent versus the yen.

“The strong won against the yen that intensifies the competition with Japanese automakers remains a concern for Hyundai and Kia,” Shin Chung Kwan, an analyst at KB Investment & Securities said by phone.“Still, we expect Hyundai and Kia to exceed their sales targets this year and sell about eight million vehicles combined.”

Seoul-based Hyundai plans to increase sales by 3.8 per cent to 4.9 million vehicles this year, while Kia targets to deliver 4.7 per cent more at 2.96 million units, the companies said in separate regulatory filings.

Hyundai slumped 5.1 per cent, the most since July 12, to 224,500 won at the close in Seoul trading. Kia dropped 6.1 per cent, while parts suppliers Hyundai Wia and Hyundai Mobis fell 7.4 per cent and 4.9 per cent, respectively. The benchmark Kospi index declined 2.2 per cent.

Last week, Hyundai named David Zuchowski, formerly in charge of US sales, to lead its US unit after the automaker lost market share in the country — the company’s biggest market after China. Separately, Hyundai and Kia agreed last week to spend as much as $395 million to settle lawsuits in the US related to claims that they overstated the fuel-economy ratings of their vehicles. Hyundai’s US sales rose 2.2 per cent for the first 11 months of 2013, while Kia’s sales in the country in the January- to-November period fell to 501,548 units from 518,421 units.In South Korea, Chief Technology Officer Kwon Moon Sik resigned along with two other executives in November after a record number of vehicles were recalled last year.

In China, Hyundai’s sales rose 24 per cent to 931,330 units in the first 11 months of 2013, on course to exceed its annual target of 970,000 units. Kia beat its full-year target of 500,000 with a month to spare, selling 526,525 vehicles in the January-to-November period.

China is Hyundai’s largest market and the second biggest for Kia, accounting for 22 per cent and 19 per cent, respectively, of total sales in the first nine months of last year, according to the companies.