Hyundai Kia tie-up falls further behind GM, Volkswagen on delivery drop
Hyundai and Kia Motors sold 7.25 million cars last year, a million short of their joint target and missing forecasts for the third consecutive year
Seoul: Third time’s the charm, but not for Korea’s largest carmaking group.
Hyundai Motor Co. and affiliate Kia Motors Corp. said Tuesday they sold 7.25 million cars last year, a million short of the companies’ joint target and missing forecasts for the third consecutive year. Deliveries fell to the lowest level since 2012. The group is forecasting a 4.1% increase to 7.55 million vehicles for 2018.
While Hyundai-Kia probably maintained its position as the world’s fifth-biggest auto group, it’s struggling in the US, where booming demand for sport utility vehicles exposed the Korean partnership’s dearth of offerings. In the meantime, the group’s prospects remain hampered in China following a boycott in that country stemming from the South Korean government’s decision to deploy a US missile-defence system on its soil.
Hyundai’s and Kia’s combined sales in 2017 dropped 7%, according to regulatory filings by the two Seoul-based manufacturers. While they didn’t release figures by market for the full year, their 11-month sales in the US plunged 11%, in contrast to numbers at General Motors Co. and Ford Motor Co. slipping about 1%.
“It is hard for Hyundai to compete against GM and Ford in the US market,” said Kim Jin-woo, an analyst at Korea Investment & Securities Co. The group will have to count on newer models of its Kona and Santa Fe SUVs this year to lure customers who have been shunning sedans for bigger and more spacious vehicles.
Coupled with the lack of SUV models, the companies have also been spending on incentives to sell their sedans.
Shares of Hyundai Motor fell 4.2% Tuesday in Seoul, the steepest drop in about three weeks. Kia’s stock declined 2.1%.
Rivals are getting stronger—Volkswagen AG is moving beyond its two-year-old diesel scandal while the Renault SA-Nissan Motor Co. combine is gaining scale with the integration of Mitsubishi Motors Corp. At the same time, industrywide delivery growth is set to slow amid stalling global economic growth, rising protectionism and dangers posed by geopolitics as threats, Hyundai and Kia said.
“I don’t expect them now to go back to the time they sold about 8 million cars,” said Kim Joon-sung, an analyst at Meritz Securities Co., adding the South Korean automakers are still recovering from the blow they received in China last year.
The group is now bolstering investments in new areas such as autonomous driving, artificial intelligence and environmentally friendly vehicles.
Hyundai set up new research institutes last year, including one in Silicon Valley. Hyundai-Kia plans to bring to market as many as 38 battery, fuel-cell or hybrid-powered cars by 2025, including an electrified Kona SUV with a range of 400 kilometers (250 miles) and a Genesis luxury electric vehicle with a range of 500 kilometers. Bloomberg
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