Hyundai and Kia expect slow sales growth in 2014

The two largest automakers in South Korea – Huyndai Motor Co. and its affiliate Kia Motors Corp. announced they expect slowest sales growth in almost a decade during 2014. On the other hand, the competition between them and their Japanese rivals, which benefit from a weaker yen, is becoming more fierce than ever.

The companies combined sales in 2014 are expected to grow 4% to 7.86 million vehicles, which the automakers chairman Chung Mong Koo said to be the slowest growth in almost a decade. As the Financial Times reported, the combined sales of Huyndai Motor Co. and Kia Motors Corp. for 2013 are estimated to 7.56 million vehicles. The chairman of the company made a New Year address to the companies employees in Seoul today, saying that the automakers would invest funds in improving vehicle safety and technology in a highly-competitive environment and times when the global economy reaches a “low growth era”.

As Bloomberg reported earlier today, this forecast is made only a few days after a leadership change in the U.S. was announced by Hyundai. The pressure on both automakers in the U.S. is increased by the fact the Korean won continues to increase compared to the Japanese yen. One of the analysts, who work for KB Investment & Securities Co. – Shin Chung Kwan, said: “The strong won against the yen that intensifies the competition with Japanese automakers remains a concern for Hyundai and Kia. Still, we expect Hyundai and Kia to exceed their sales targets this year and sell about 8 million vehicles combined.”

The head of Hyundais U.S. Division was replaced in the end of 2013. Mr. David Zuchowski took over the position of the former chief John Krafcik. The situation for the two automaker companies on the U.S. market becomes even harder thanks to the series of recalls and quality issues received. The companies also reached 210-million-dollar and 185-million-dollar settlements in class action lawsuits concerning the mileage per gallon on more than 1 million cars.

However, there are some analysts who forecast an improvement in the performance of Hyundai on the U.S. market in 2014. These expectations are based on the fact the company plans launching an upgraded luxury Sedan Genesis, as well as a new-generation Sonata mid-sized Sedan in the months yet to come. Kia Motors Corp. on the other hand plans to introduce its new K900 flagship Sedan in the first quarter of 2014. One of the Korea Investment & Securities analysts – Suh Sung-moon said: “The currency environment is certainly not favourable to the Korean carmakers but their U.S. outlook is not as bad as investors fear. Their U.S. sales are likely to recover this year thanks to the positive effect of new cars.”

According to Bloomberg, the current share price of Hyundai Motor Co. is 5.07% down, and its one-year return rate is 3.94% up. The current share price of Kia Motors Corp. is 6.06% down, and its one-year return rate is 6.39% down.