Hyundai, Kia miss annual sales target in 2015

January 4, 2016

SEOUL (Yonhap) — Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. failed to meet their annual sales target in 2015 for the first time in years due in part to slowing demand in emerging markets including China, industry data showed Monday.

Their combined sales in 2015 came to 8,015,745 units, a slight increase from last year when they sold 8,005,220 units, according to data provided by the two carmakers.

They sold more than 8 million cars for the second straight year, but the latest figure marked the first time since 2008 that the two South Korean carmakers failed to meet their annual sales target of selling 8.2 million cars, which was set at the start of 2015.

Though the full-year sales numbers for each country have yet to be disclosed, Hyundai Motor and Kia Motors surely suffered a lot last year in China and other emerging markets such as India and Russia.

In particular, their sales in China during the January-November period came to 1.46 million units, down 7.5 percent from a year earlier, though the downturn has been recently slowed due to ramped-up marketing and price cuts for major models.

“Basically, what drove their fast growth in past years was strong demand from China and other emerging markets, but things were quite bad there last year,” said Seo Sang-moon, an analyst at Korea Investment & Securities.

Their lackluster overseas performance offset relatively strong business here in South Korea.

The latest data showed that the two exported a total of 6,774,124 cars last year, down 1.2 percent from a year earlier. Their combined sales in South Korea, meanwhile, grew nearly 8 percent to 1,241,621 units.

Outlooks for this year are not any better, and the Hyundai Motor Group that owns the two carmakers under its wing lowered its annual sales objective from their 2015 target, deemed “ambitious” by some critics expressing worries over many challenging downside risks at home and abroad.

Citing the slowing growth in China, low crude oil prices and heightened uncertainty following the recent U.S. rate hike, Hyundai Motor Group Chairman Chung Mong-koo said that the group aims to sell 8.13 million cars this year here and in overseas markets.

It is the first time in at least 13 years that the world’s fifth-largest auto giant cut its business target from a year earlier.

Hyundai Motor said that it aims to sell 5.01 million cars globally this year, while Kia Motors plans to sell 3.12 million cars, the two said in separate regulatory filings.

Market experts say that the sales target is relatively “conservative” in that it is about a 1.5 percent rise from last year’s actual sales and is also lower than the 2.9 percent global demand increase projected by its own think tank.

Rather than emphasizing “quantitative” growth, Chairman Chung underlined the importance of research and development that could help enhance its product quality and brand image.

In an event marking the start of 2016, he told his employees that the group should focus more on research and development while leading technological innovation in the industry and enhancing its brand image “significantly” based on top-class quality and product competitiveness.

Meanwhile, the country’s five automakers including Hyundai Motor and Kia Motors sold a combined sold a combined 9,011,240 cars at home and abroad, up 0.7 percent from a year earlier, according to data provided by each company.

The other three are GM Korea Co., Renault Samsung Motors Co. and Ssangyong Motor Co., and the figures excluded complete knockdown kits that are assembled abroad.