Hyundai, Kia Aim to Raise 2008 Sales on New Vehicles
BloomBarg.com: January4,2008
Jan. 2 (Bloomberg) -- Hyundai Motor Co. and affiliate Kia Motors Corp., South Korea's biggest automakers, aim to increase sales 21 percent this year selling new cars and sport-utility vehicles in China, India and other overseas markets.
The automakers expect to sell a combined 4.8 million vehicles globally this year, compared with an estimated 3.97 million for 2007, Seoul-based Hyundai Motor said in a statement today.
Hyundai will sell 3.11 million vehicles, a record.
Hyundai and Kia plan to release at least five new models, including the Genesis premium sedan and the Mohave SUV, this year to win customers from Toyota Motor Corp.
in China and overcome slower growth in the U.S. Chairman Chung Mong Koo is relying on emerging markets to boost sales as consumers in the U.S., the world's largest auto market, may slow down purchases.
``The target is an aggressive one,'' said Stephen Ahn, an analyst at Woori Investment & Securities Co. in Seoul.
Shares of Hyundai Motor fell 4.3 percent, its biggest decline in more than a month, to 68,500 won today in Seoul. The stock gained 6.2 percent last year. Kia fell 1.4 percent while the Kospi index declined 2.3 percent.
Car sales will fall this year in North America, Standard & Poor's said Dec. 20, citing an unclear economic outlook. U.S. sales of cars and light trucks may drop to 15.5 million this year from 16 million in 2007.
Cloudy Outlook
``The cloudy outlook for U.S. auto markets this year seem to pressure investor sentiment,'' said Nam Kyung Moon, an analyst at Meritz Securities Co.
in Seoul. Nam has a ``hold'' rating on the automaker's stock.
Hyundai Motor didn't give a separate sales outlook for the U.S. market, its second biggest. Its U.S. sales grew 0.6 percent between January and November, the second-slowest pace since 1998.
High oil prices, an appreciation of the local currency and growing competition with Japanese and European automakers are threats for the two Korean companies, Chairman Chung said.
``Despite the unfavorable environment, this year will be the starting point to prepare for the future,'' Chung told employees at the company's headquarters in Seoul.
Hyundai Motor Group, which includes the two automakers and other affiliates, targets group revenue of 118 trillion won ($126 billion), 15 percent more than last year.
Sales Momentum
``The new models will bring fresh momentum to sales this year,'' said Kim Jae Woo, an analyst at Mirae Asset Securities Co. in Seoul. ``Increased capacity in India and China should also raise sales.'' Kim has a ``buy'' rating on Hyundai Motor.
Hyundai Motor will spend $400 million to build its first factory in Russia and is also expanding capacity in India.
The automaker may build a new facility in Latin America.
Hyundai and Kia's overseas production capacity will rise 75 percent to about 3.03 million units by 2011, up from 1.73 million in 2007, according to the companies.
Hyundai Motor aims to sell 3.11 million vehicles this year, 20 percent more than in 2007, the statement said. It forecast 2008 revenue at 46 trillion won, 12 percent higher than its 2007 estimate of 41 trillion won.
Kia plans to sell 1.7 million units in 2008, 24 percent more than the 2007 estimate of 1.37 million. The carmaker plans to raise annual revenue by 21 percent to 23 trillion won from 19 trillion won in 2007, it said.
Kia's Plans
Kia in December opened a second factory in China. The 6.8 billion yuan factory can make 300,000 vehicles annually, boosting Kia's total capacity to 430,000 units a year.
Hyundai also plans to open its second plant in the country in the second quarter of this year to double capacity to 600,000.
The two automakers have lost customers to General Motors Corp. and Toyota. In the first 11 months of 2007, Hyundai's sales of locally made cars in China fell 20 percent, while those at Kia declined 14 percent.
Competition is increasing for Hyundai and Kia in the home market as Toyota, Bayerische Motoren Werke AG and other foreign automakers last year had a record market share in South Korea. Hyundai and Kia have a combined 75 percent.
In the first 10 months of last year, imported vehicles had 5.1 percent of South Korea's total auto sales as economic growth made imported cars affordable. Nissan Motor Co. and other carmakers are set to introduce mid-priced models.
To compete, Kia plans to release five new or revamped models this year, including the Mohave SUV that debuts tomorrow.
Hyundai will release the Genesis rear-wheel drive premium sedan on Jan. 8, seeking to challenge Bayerische Motoren Werke's 5 series and Daimler AG's E-class sedans.
``People are really looking at Genesis, if it'll be successful overseas,'' Mirae Asset's Kim said. ``It'll be a big challenge for Hyundai Motor this year.''
