Hyundai and Kia see hard road ahead
Print Edition
The man who led South Korea’s auto industry on a tear through the last decade said Hyundai Motor Co and Kia Motors Corp see what will be their lowest annual sales rise since 2003 as the weak yen powers Japanese rivals.
In his annual New Year speech to staff yesterday, 75-year-old group chairman Chung Mong-koo said sales at Hyundai and its smaller affiliate Kia will likely grow just 4 percent in 2014. Global competition is about to get tougher in an industry facing changing technology and an uncertain future, he warned.
The Korean duo export about two-thirds of its cars from South Korea, a much higher proportion than Japanese peers, making them more vulnerable to currency swings. A weaker yen gives Japanese carmakers like Toyota Motor Corp, Honda Motor Co and Nissan Motor Co leeway to offer customers better deals in key export markets like the US — the same advantage that helped Hyundai and Kia after the global financial crisis of 2008.
“Competition among companies is intensifying, as the global economy has entered an era of low growth,” Chung said in his address to some 1,000 employees at Hyundai’s Seoul headquarters. “Technological convergence leads to change in the industry, and adds to uncertainty.”
Yesterday, the won hit its highest level for more than five years against both the dollar and the yen, prompting talk in Seoul of possible government intervention in currency markets to help exporters. Shares in Hyundai and Kia, ranked fifth in the world by combined global sales, fell 5.1 percent and 6.1 percent, respectively.
The yen’s fall has been stoked by Japan’s attempts to support its export industries and pull its economy out of a two-decade slump. A senior official in South Korea earlier this week said the country’s own exporters could be hurt as a result.
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