Hyundai Motor, Kia Forecast Slowest Sales Growth in 10 Years

The companies’ combined deliveries will rise to 8.13 million vehicles in 2016 from about 8 million vehicles a year earlier, Chung Mong Koo, chairman of both automakers, said during a New Year address to employees in Seoul on Monday.

Hyundai Motor expects 2016 sales to reach 5.01 million vehicles, after posting 2015 sales of 4.96 million vehicles -below its earlier target.

The hike in sales comes at a time when Hyundai recently reported record bookings for the year 2015.

He said that while Hyundai/Kia managed to sell more than eight million cars for the second straight year in 2015 despite “challenging” market situations, the slowing growth in China and other emerging markets, low crude oil prices and economic instability does not bode well for the Korean automaker, the world’s fifth-largest.

The automakers sales target for this year marks the weakest sales growth in 10 years.

United States and Japanese rivals have been regaining lost ground in the United States, while demand in emerging markets and the world’s biggest auto market – China – has been cooling.

Demand began to rebound after the Chinese government cut a sales target by half starting in October last year through the end of this year. Kia Motors set its 2016 goal at 3.12-million vehicles, after selling 3.05-million vehicles – below its earlier goal.

Hyundai Motor and Kia Motors, South Korea’s largest automakers, forecast their weakest sales increase in a decade as a slump in demand in China and a stronger won cut their profit.

Kia is expanding manufacturing capacity at its third plant in China and plans to start producing its Forte compacts in Mexico in May, for export to the USA and nations in South America.

“It seems that Hyundai, Kia have set a conservative target for this year, as worries about emerging markets persist”, Hana Daetoo Securities analyst Song Sun-jae said. Kia Motors shares gained 1 percent a year ago, lagging the wider Seoul market’s 2 percent gain. Shares in Hyundai Motor were down 2.68 per cent and Kia shares slid 3 per cent in morning trade.

In its latest effort to build a more high-end identity, Hyundai said last week it had hired a former Lamborghini executive, Manfred Fitzgerald, to lead the company’s global strategy on the new Genesis luxury brand.