Hyundai Motor and its affiliate Kia Motors, together forming the fifth largest automaker in the world, have announced a production output reduction after deliveries at both companies registered a negative trend.
The companies issued a joint statement saying the Hyundai brand lowered production at its Asan factory in South Korea by 25 percent on May 28 and 29, while Kia cut the working hours at its Chinese business unit, but without being more specific on Kia’s cutting. The Seoul-based companies have been hit by declining sales as they are unable to cope with their Japanese rivals because of headwinds from the currency-exchange rates. The two automakers also pledged earlier this week to increase their efforts to reduce spending following the first-quarter profit drop. “The production cuts are to flexibly adjust the plants’ production to market demand,” read the statement. Hyundai shares were down 1.5 percent to 136,000 won at the close in Seoul trading while its sibling Kia remained level, even as South Korea’s benchmark Kospi index slid 0.2 percent. Hyundai’s stock has lost 20 percent of value this year, plagued by dwindling sales and investor lack of trust following last year’s criticized decision to buy a valued property in Seoul to build a new headquarters.
Hyundai and Kia’s Japanese competitors have been lifted by the strong South Korean currency and the weak Japanese one, with the latter gaining an edge across overseas markets. Additionally, as the Korean automaker announced its local and overseas deliveries dropped for the second month in a row, it becomes clear the brand is also unable to follow the global trend towards SUVs and crossovers, still heavily reliant on a sedan-based model lineup.