Hyundai and Kia, South Korea's largest car makers, forecast sales to climb 4.7 per cent this year as they count on new model introductions and electric vehicles (see video below) to counter intensifying competition amid global uncertainties.
Hyundai and Kia are targeting to deliver a combined 8.25 million vehicles in 2017 from 7.88 million units a year earlier, according to regulatory filings. Hyundai expects to deliver 5.08 million vehicles, while Kia sees 3.17 million vehicle sales this year.
The two companies are counting on new plants in China and Mexico, where they will gradually raise output, and the introduction of models including a 4x4 to attract buyers. Executives at car makers across the world are looking for clarity on the policies the US president-elect Donald Trump will adopt in the world’s second-largest car market as he has said his agenda will be based on the principle of putting America first from “producing steel, building cars or curing disease”.
The Hyundai chairman Chung Mong-koo, said in a statement issued to employees: “Amid slowing global economic growth, uncertainties are rising more than ever as trade protectionism spreads and competition intensifies in the auto industry.” He urged “swift and flexible” responses to the uncertain business environment.
Hyundai and Kia are planning to introduce more than 10 new vehicles or revamped versions of existing models annually, they said. Hyundai will introduce a small 4x4 at home and plans to begin selling a high-performance line, while Kia will unveil a premium sports saloon, a China-specific 4x4 and the Morning compact car. Genesis, Hyundai’s premium marque, plans to introduce its midsize luxury saloon G70 this year.
The two motor makers missed their annual sales target for the second consecutive year and posted a decline in deliveries in 2016 for the first time since 2000. Hyundai in September suffered its first full-scale strike in 12 years after a series of partial stoppages that started in July, before the union and management reached an agreement on wages in October. Workers at Kia also went on strikes during the year. Hyundai’s sales at home fell 7.8 per cent and deliveries overseas declined 1.2 per cent last year, it said, without providing detail.
Car demand in two of Hyundai’s biggest markets will probably wane, with industrywide sales growth in China expected to slow after an increase in the levy on small-engine vehicles and as the US Federal Reserve raised interest rates in December and forecast a steeper path for borrowing costs in 2017.
Deliveries of the two South Korean car makers in China rose 7.2 per cent in the 11 months through November. Industrywide demand in the Chinese market climbed after the government cut a levy on small-engine vehicles in October 2015 to 5 per cent. The tax has been raised to 7.5 per cent this year and will be further increased to 10 per cent in 2018. A move that is expected to slow the pace of sales growth this year.
Hyundai, which counts China as its biggest market by volume, began producing its new small saloon Verna Yuena at its fourth plant in the Asian nation. The factory in Cangzhou, Hebei province will have an output of 200,000 vehicles in 2017 and will be expanded to 300,000 units by 2018. The company’s fifth plant in Chongqing will be completed this year. The firm has not released its delivery figures in China for December.
Relatively low petrol prices have prompted American consumers to favour pickup trucks and 4x4s, a shift that has hurt Hyundai as it has a saloon-heavy line up. Hyundai Motor said last month its chief executive for America, Dave Zuchowski, will be leaving the company. Sales of the car maker in its second-largest market rose about 2 per cent in the 11 months through November, slower than the 5.6 per cent growth in the year-earlier period.
The two manufacturers will step up investments in research and development in areas such as autonomous driving technology, Mr Chung said.
Hyundai will show a concept Ioniq model to demonstrate its self-driving technology at the Consumer Electronics Show in Las Vegas this week, as the company aims to build fully self-driving vehicles by 2030. Kia unveiled its concept Novo in Las Vegas last year.
Also today, South Korea banned the sale of 10 models built by Nissan, BMW and Volkswagen’s Porsche after an investigation found the car makers fabricated documents related to emission tests.
The three manufacturers were slapped with total fines of 7.17 billion won (Dh21.6million), which apply to 4,523 vehicles, and the certifications given for these models have been withdrawn, the ministry of environment said. Six of the models are on sale, while four were discontinued, it said.
* Agencies
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