Why Hyundai sees a bumpy US market
Hyundai has not seen its yearly income rise for five years now.
Seoul - Long product cycle, heavy reliance on sedan sales among challenges
Published: Thu 25 Jan 2018, 7:29 PM
Last updated: Thu 25 Jan 2018, 9:34 PM
Hyundai Motor said challenges are expected to persist in the US market, where its sales have already been battered by a lack of SUVs, after earlier reporting its worst annual earnings in seven years.
The South Korean firm, which has not seen its yearly income rise for five years now, is battling a lot of headwinds - a long product cycle, heavy reliance on sedan sales in China and the United States as well as a firmer local currency that is eating into its profits repatriated from overseas.
And any recovery will likely be slow as indicated by Hyundai CFO Choi Byung-chul's comment that "the US sales conditions are expected to be challenging, as a result of persistent weakness in demand and rising competition".
In the United States, Hyundai's third-biggest market after China and South Korea, inventory levels rose to four months at the end of last year. Hyundai and affiliate Kia Motors, together the world's No.5 automaker, missed their global sales target for a third year in 2017 as business in China also came under pressure from a chill between Beijing and Seoul over South Korea's deployment of a US anti-missile system.
Hyundai is looking to boost China sales by 15 per cent to 900,000 vehicles this year, as relations between the countries thaw, and revive US sales momentum by launching models fit for the market, the CFO said at an earnings briefing on Thursday.
But according to Ko Tae-bong, an analyst at Hi Investment & Securities: "The earnings outlook for the first half is tough, as Hyundai is expected to focus on reducing its high inventory ahead of new model launches in the US later this year."