LDN - Business

Hyundai, Kia target sales rebound after first fall in 18 years

[January 02, 2017] By Hyunjoo Jin and Se Young Lee

SEOUL (Reuters) - Hyundai Motor and affiliate Kia Motors on Monday forecast global sales to rebound in 2017 by a stronger-than-expected 5 percent, after posting their first annual sales fall in nearly two decades last year.

Sales could get a lift this year with emerging markets such as Russia stabilizing, and with Hyundai and Kia Motors gearing up to boost supply to the United States and China, analysts said.

But margins could come under pressure as the South Korean duo - which together rank fifth in global sales - plan to add capacity in China and Mexico, just as many analysts expect those markets and the United States to slow.

"With the global economy continuing its low growth, trade protectionism spreading and competition intensifying in the automobile industry, uncertainty is growing more than ever," Hyundai Motor Group Chairman Chung Mong-koo said in his New Year message to employees.

The 78-year-old chief said the automakers will launch more than 10 new models every year, including a new SUV for advanced markets and a Genesis G70 sedan this year.

The projected 5 percent rise in global sales for 2017 to 8.25 million vehicles easily beats the 1.9 percent rise forecast earlier by Hyundai Motor Group's own think-tank.

"The 2017 goal is slightly higher than my projection," said Ko Tae-bong, an auto analyst at Hi Investment & Securities.

RISING COMPETITION

Hyundai Motor likely clocked its fourth straight annual profit decline in 2016. Sales were hit by its sedan-heavy line-up, which meant it missed a boom in SUV demand, and sluggish emerging markets.

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Men talk in front of a Hyundai Motor dealership in Seoul, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji

Hyundai Motor sold 4.86 million vehicles compared with its target of 5.01 million last year. Kia Motors sold 3.02 million vehicles, shy of its goal of 3.12 million.

Hyundai Motor is now targeting 2017 global sales of 5.08 million vehicles, while its smaller affiliate set its goal at 3.17 million vehicles.

Kia Motors Vice Chairman Lee Hyong-keun warned of tough competition in the year ahead.

"Rivals are expected to launch a full-blown assault based on their cost competitiveness," he said in a speech to employees.

Hyundai Motor shares ended up 2.7 percent on Monday and Kia Motors stocks were up 0.6 percent in a flat wider market.

Hyundai Motor shares fell for a third straight year in 2016, down 2 percent, while Kia Motors was the worst-performing stock among major car makers with a 25 percent slump.

Executives paid the price for Hyundai Motor's rough year. The automaker's top U.S. executive resigned and the South Korea sales chief and China head were replaced.

(Reporting by Hyunjoo Jin and Se Young Lee; Editing by Stephen Coates)

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