Hyundai Motor Co. and its affiliate Kia Motors Corp. on Wednesday said they expect a slowdown in sales gain for 2014 as competition intensifies and a stronger won creates export problems.
Overall, KIA and Hyundai combined deliveries are expected to reach 7.86 million vehicles in 2014 – up 4 percent; the slowest growth since 2006, Chung Mong Koo, the chairman of Hyundai Motor Group said today.
Most of the competition comes from Japan where the most of the automakers have benefited from a sharp decline in the yen’s value – by nearly 20 percent in 2013. A weaker yen makes Japanese cars more affordable and the automakers can increase their profitability.
By contrast, the won, South Korea’s national currency increased by almost 10 percent against the U.S. dollar; and considering that Hyundai and KIA exports about 67 percent of its cars from South Korea they are more vulnerable to currency fluctuations compared to other automaker that build vehicles in different parts of the world.
“Competition among companies is intensifying, as the global economy has entered an era of low growth,” Chung Mong Koo said.
“The yen’s weakness is not welcoming news to Hyundai investors. This may adversely affect its market share and sales,” said Song Sun-jae, an analyst at Hana Daetoo Securities.