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The two carmakers have targeted a 4 per cent increase in their combined sales in 2014, the lowest since 2003. The Korean carmakers sold 7.56m vehicles in total last year, up 6 per cent from 2012, surpassing their original target of 7.41m units.
Chung Mong-koo, the auto group’s chairman, told employees in a New Year message that the carmakers would focus on quality this year as competition increases and the global economy entered “a low-growth era”.
Hyundai and Kia enjoyed rapid sales growth in the wake of the 2008 global financial crisis, with their combined sales jumping 24 per cent in 2010.
However, that momentum has weakened in recent years as they have been holding back from capacity expansion to focus on boosting margins.
The companies face a tougher year in 2014 as the Korean won continues to appreciate against the Japanese yen, adding pressure on Hyundai and Kia in the US, their biggest market after China. The Korean won gained more than 20 per cent against the yen last year as Japan undertook a monetary stimulus programme.
Hyundai’s US market share has fallen from 5.1 per cent in 2011 to 4.6 per cent last year due to a lack of new cars and low inventories. Hyundai and Kia have also been dogged by a series of recalls and quality issues in the US, and last week reached preliminary $210m and $185m settlements in class action lawsuits respectively, sparked by overstating the mileage per gallon on more than 1m cars.
Following the weak sales forecasts, shares of Hyundai and Kia fell back 4.4 per cent and 6.1 per cent respectively on Thursday, underperforming the benchmark Kospi index, which contracted 1.7 per cent.
Hyundai was among the worst performing stocks of major automakers last year, with the company’s shares rising 8 per cent in 2013, compared with Toyota’s 60 per cent surge and General Motors’ 41 per cent jump.
(Source: Financial Times)