BackHyundai posts record Oct sales; shares fall on recall talk
October sales rise 14% from a year earlier as Hyundai bounces back from labour strike in South Korea
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Seoul: Hyundai Motor Co. posted record monthly sales for October, but its shares tumbled on Thursday, which analysts said was sparked by market rumours that the South Korean automaker may face a recall or litigation in the US.
Hyundai Motor said October sales rose 14% to 412,189 vehicles from a year earlier as it bounced back from labour strikes in South Korea while overseas production increased.
As of 10:38am, shares in Hyundai Motor were down 5.57% after earlier slumping 5.6%. Shares at its affiliate, Kia Motors Corp., were down 1.82% in a wider market that was down 0.52%.
“Today’s share drop appears to be the result of unsubstantiated rumours making rounds in the market that Hyundai is set to encounter some trouble in the US market," said Ahn Se-hwan, an auto sector analyst at IBK Securities.
Two Hyundai Motor executives told Reuters that they have not heard about such problems and a Hyundai spokesman said the company was investigating the rumours and did not have any immediate comment.
Shin Jung-kwan at KB Securities said there was market talk that the US National Highway Traffic Safety Administration is conducting quality investigation into Hyundai, but stressed that this happens fairly regularly.
Hyundai Motor recalled some 230,000 Santa Fe SUVs for air bag issues, US safety regulators said in July. Hyundai Motor was also sued for allegedly misleading consumers sensitive to high gas prices that its popular 2011 and 2012 Elantra model is more fuel-efficient than it actually is.
Shares of South Korea’s biggest carmaker have fallen 15% since late September, mainly due to concerns that a strengthening won and tight supply of its cars may slow earnings growth in coming months.
Hyundai has not announced plans for a new plant for at least two years as it focuses on building its brand and quality issues rather than aggressively chasing market share. This has left it short of cars to sell into a recovering US market where Japanese rivals have muscled back in, as well as in emerging markets.
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