Hyundai Mo­tor ex­pects sales of sport-util­ity to rise

The Pak Banker - - Company& -

CAL­I­FOR­NIA: Hyundai Mo­tor Co., the fastest grow­ing mass-mar­ket au­tomaker in the U.S., ex­pects sales of its sportu­til­ity and cross­over ve­hi­cles to rise faster than its cars in 2011.

"We have lots of up­side op­por­tu­nity on the car-based, light truck side of the mar­ket, in crossovers," U.S. Chief Ex­ec­u­tive John Kraf­cik said in an in­ter­view yes­ter­day in La Jolla, Cal­i­for­nia. Hyundai's share of U.S. re­tail car sales is about 7 per­cent and it's about 2 per­cent for light trucks, he said.

The Seoul-based com­pany this week said U.S. sales rose 45 per­cent in Novem­ber and 23 per­cent in 2010's first 11 months. The Sonata sedan, with a 65 per­cent gain this year, led the in­crease, along with Ge­n­e­sis lux­ury cars and Elantra com­pacts.

The au­tomaker's ac­cel­er­at­ing U.S. sales have been fu­eled by new mod­els with en­hanced de­signs, im­proved qual­ity and prices typ­i­cally be­low those of com­pet­ing Toy­ota Mo­tor Corp. and Honda Mo­tor Co. mod­els. Hyundai's growth also co­in­cides with Toy­ota's ef­forts to re­as­sure buy­ers about its qual­ity af­ter record re­calls and the yen's rise to a 15-year high against the dol­lar, which trims the com­pet­i­tive­ness Ja­panese ex­porters.

Light trucks, in­clud­ing SUVs, crossovers, mini­vans and pick­ups, have been the fastest grow­ing ve­hi­cles in the U.S. this year, ris­ing 18 per­cent through Novem­ber, while in­dus­try­wide car sales grew only 5.4 per­cent, ac­cord­ing to Au­to­data Corp.

"Cars are where our dra­matic vol­ume gains came from, but we've been un­der­rep­re­sented on the growth side with crossovers and SUVs," Kraf­cik said. To rem­edy that, the com­pany is seek­ing ways to boost pro­duc­tion of its Tuc­son and Santa Fe mod­els and in­crease sup­ply of the 7-pas­sen­ger Ver­acruz model.

"I'm not say­ing we need to add in­cre­men­tal prod­ucts, but that we've got to find a way to get some more ca­pac­ity so we can sell more of those prod­ucts," he said.

Hyundai rose 2.8 per­cent in Seoul trad­ing to 182,500 won as of 1:17 p.m. The shares have risen 51 per­cent in 2010.

The com­pany es­ti­mates the U.S. auto mar­ket will ex­pand by 1 mil­lion units in 2011 to 12.5 mil­lion cars and light trucks, up 8.7 per­cent

of from about 11.5 mil­lion this year, he said.

Kraf­cik spoke af­ter a brief­ing with re­porters on the 2011 Elantra that Hyundai be­gan sell­ing in the U.S. late last month. The car, built at Hyundai's Mont­gomery, Alabama, plant for the first time, is de­signed to win sales from Toy­ota's Corolla and Honda's Civic, the top-sell­ing U.S. small cars.

More­over, Hyundai En­gi­neer­ing & Con­struc­tion Co. fell the most in two weeks af­ter Hyundai Group gave share­hold­ers doc­u­ments sup­port­ing its fund­ing plan for buy­ing a stake in the com­pany, damp­ing spec­u­la­tion the deal may fall apart.

South Korea's biggest con­struc­tion com­pany plunged as much as 7 per­cent in Seoul, the biggest in­tra­day de­cline since Nov. 17. Hyundai Mer­chant Ma­rine Co., Hyundai Group's largest unit, dropped as much as 7.9 per­cent.

Hyundai Group said to­day it gave share­hold­ers sell­ing 35 per­cent of the builder in­for­ma­tion show­ing that it didn't use shares of the con­struc­tion com­pany or other units as col­lat­eral for a loan. The doc­u­ments may ease the sell­ers' con­cerns about Hyundai Group's abil­ity to pay for the deal even as the builders' other share­hold­ers worry about how much ex­tra money the group will be able to in­vest in the com­pany fol­low­ing a deal, said Kang Se­ung Min, an an­a­lyst at NH In­vest­ment & Se­cu­ri­ties Co.

" In­vestors still have doubts about how Hyundai Group will re­pay debts used to buy the builder with­out hurt­ing the fi­nan­cial health of its units or Hyundai En­gi­neer­ing," the Seoul-based an­a­lyst said. The doc­u­ments to­day "strengthen spec­u­la­tion that the deal may go through," he said.

Hyundai Group said it didn't in­clude a copy of the 1.2 tril­lion won ($1 bil­lion) loan agree­ment with Paris-based Natixis SA in the doc­u­ments it handed over. The share­hold­ers will re­view the sub­mis­sion be­fore de­cid­ing what steps to take next, said Korea Ex­change Bank, one of the sell­ers.

Hyundai Group of­fered about 5.5 tril­lion won for the con­trol­ling stake in the builder, two peo­ple fa­mil­iar with the mat­ter said on Nov. 16, the day the group was name pre­ferred bid­der. That's more than dou­ble the mar­ket price.

The bid was about 400 bil­lion won higher than an of­fer made by Hyundai Mo­tor Group, said the peo­ple. Hyundai Mo­tor Group and Hyundai Group, once part of the same busi­ness group, made ri­val of­fers for the builder, ex­tend­ing a decade-long fam­ily feud.

Hyundai En­gi­neer­ing fell 3.7 per­cent to 64,700 won as of 12:22 p.m. in Seoul trad­ing. Hyundai Mer­chant dropped 2.4 per­cent to 44,600 won.

The share­hold­ers sell­ing the stock said on Dec. 1 that Hyundai Group had un­til Dec. 7 to sub­mit in­for­ma­tion about the loan agree­ment and other in­for­ma­tion show­ing how it will pay for the stake in the builder -Bloomberg

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