Hyundai Motor and Kia Motors, South Korea's largest carmakers, have forecast their weakest sales growth in nine years as they run out of capacity to increase output and competition intensifies in major markets.
The companies' combinsed deliveries would rise 2.5 per cent to 8.2 million vehicles this year, Chung Mong-koo, the chairman of both carmakers, said during a New Year address to employees yesterday. That would be the slowest growth since 2006. The forecast was in line with analysts' estimates.
Hyundai and Kia would "actively respond" to global uncertainties and a weaker yen that gave Japanese competitors an advantage, and would be able to "easily" meet this year's target, Chung said. The carmakers plan to increase production by a combined 38 per cent in mainland China by 2018 to meet demand and have introduced updated versions of the Tucson and Sportage sport utility vehicles to maintain their market share.
"The carmakers will have a slow 2015 as they both have no room to increase output with no new plants or expansions planned for the year," said Koh Tae-bong, an analyst at HI Investment & Securities. "What's key for the coming year is maintaining market share and gauging how well the biggest markets react to their new SUV models."
Hyundai planned to sell 5.05 million vehicles this year, while Kia targeted delivering 3.15 million units, the companies said in separate filings yesterday.
Hyundai and its Chinese partner BAIC Motor planned to expand production on the mainland by 57 per cent by adding two plants with an annual output capacity of 300,000 vehicles each in Chongqing and in Cangzhou, Hebei province, they said.