Hyundai and Kia still upbeat on growth
• South Korean vehicle makers forecast 4.7% sales increase despite rising competition
Hyundai Motor and Kia Motors, South Korea’s largest vehicle makers, forecast sales to climb 4.7% in 2017 as they count on new model introductions to counter intensifying competition amid global uncertainties.
Hyundai and Kia are targeting to deliver a combined 8.25-million vehicles in 2017 from 7.88-million units a year earlier, according to regulatory filings. That compares with the 8.24-million units average estimate of five analysts surveyed by Bloomberg News.
Hyundai expects to deliver 5.08-million vehicles, while Kia sees 3.17-million vehicle sales in 2017.
The two companies are counting on new plants in China and Mexico, where they will gradually raise output, and the introduction of models including a sport utility vehicle (SUV) to attract buyers.
Executives at global car makers are looking for clarity on the policies US president-elect Donald Trump will adopt in the world’s second-largest vehicle market as he has said his agenda will be based on the principle of putting the US first from “producing steel, building cars or curing disease”.
“Amid slowing global economic growth, uncertainties are rising more than ever as trade protectionism spreads and competition intensifies in the auto industry,” chairman Chung Mong-koo, said in a statement issued to employees.
He urged “swift and flexible” responses to the uncertain business environment.
NEW MODELS
Hyundai and Kia were planning to introduce more than 10 new vehicles or revamped versions of existing models annually, the car makers said. Hyundai will introduce a small SUV at home and plans to begin selling a highperformance line, while Kia will unveil a premium sports sedan, a China-specific SUV and Morning compact car. Genesis, Hyundai’s premium marque, plans to introduce its midsize luxury sedan G70 this year.
The two car makers missed their annual sales target for the second consecutive year and posted a decline in deliveries in 2016 for the first time since 2000. Hyundai in September suffered its first full-scale strike in 12 years after a series of partial stoppages that started in July, before the union and management reached an agreement on wages in October. Workers at Kia also went on strikes during the year. Hyundai’s sales at home fell 7.8% and deliveries overseas declined 1.2% in 2016, it said, without providing detail.
Vehicle demand in two of Hyundai’s biggest markets will likely wane, with industrywide sales growth in China expected to slow after an increase in the levy on small-engine vehicles and as the US Federal Reserve raised interest rates in December and forecast a steeper path for borrowing costs in 2017.
Shares of Hyundai rose 2.7% in Seoul, the highest level since April 26. Kia Motors advanced 0.6%. Hyundai declined 2% in 2016, compared with a 3.3% gain in the benchmark Kospi index. Kia plunged 25% in 2016.
CHINA CAPACITY
Deliveries of the two South Korean vehicle makers in China rose 7.2% in the 11 months through November. Industrywide demand in the world’s biggest vehicle market climbed after the government cut a levy on small-engine vehicles in October 2015 to 5%. The tax has been raised to 7.5% in 2017 and will rise to 10% in 2018. A move that is expected to slow the pace of sales growth.