Hyundai-Kia Forecast Slowest Sales Growth in Eight Years

January 3, 2014 Leave a comment

Hyundai-Kia Forecast Vehicle Sales of 7.86 Million Units in 2014

Hyundai Motor Co. (005380) and affiliate Kia Motors Corp. (000270) projected vehicle sales this year that trailed analysts’ estimates as a strengthening won made South Korea’s exports less competitive.Hyundai and Kia are targeting to deliver a combined 7.86 million vehicles in 2014, Hyundai Motor Group said today in a regulatory filing. That compared with the 8 million average estimate of five analysts surveyed by Bloomberg News.

Chairman Chung Mong Koo has to overcome a stronger won that has made South Korea’s exports less competitive, reverse a sales slump for Hyundai Motor in the U.S. and improve the carmaker’s safety ratings. The 75-year-old industrialist has replaced executives in South Korea and the U.S. after a series of recalls last year and lawsuits brought by customers claiming the companies overstated fuel-economy ratings.

“The strong won against the yen remains a concern for the automakers,” Koh Tae Bong, an analyst at HI Investment & Securities Co. said before the announcement. “Still, our outlook is optimistic.”

Hyundai’s shares rose 8.2 percent in Seoul trading last year, outperforming the benchmark Kospi index’s 0.7 percent gain. Kia’s stock declined 0.7 percent.

Hyundai named David Zuchowski, formerly in charge of sales, to lead its U.S. unit after the automaker lost market share in its biggest market after China.

U.S. Lawsuits

Hyundai and Kia agreed last week to spend as much as $395 million to settle lawsuits in the U.S. related to claims that they overstated the fuel-economy ratings of their vehicles.

In South Korea, Chief Technology Officer Kwon Moon Sik resigned along with two other executives in November after a record number of vehicles recalled last year.

The won has gained about 22 percent against the yen over the past 12 months, curbing Hyundai and affiliate Kia’s competitiveness against Japanese automakers in U.S. exports.

In China, Hyundai’s sales rose 24 percent to 931,330 units in the first 11 months of 2013, on course to exceed its annual target of 970,000 units. Kia beat its full-year target of 500,000 with a month to spare, selling 526,525 vehicles in the January-to-November period.

China is Hyundai’s largest market and the second biggest for Kia, accounting for 22 percent and 19 percent, respectively, of total sales in the first nine months of last year, according to the companies.

The automakers sold 7.56 million vehicles in total in 2013, exceeding their goal of 7.41 million units, according to the Hyundai filing.

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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