Hyundai, Kia forecast smallest growth in global sales in 7 years
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SEOUL (Bloomberg) -- Hyundai Motor Co. and smaller affiliate Kia Motors Corp., South Korea's two largest automakers, forecast their slowest sales growth in seven years as a slowing global economy and strengthening won saps demand.
The two companies plan combined sales to rise 4.1 percent to 7.41 million vehicles in 2013, Chung Mong Koo, chairman of both Hyundai and Kia, told employees during a new year address in Seoul Wednesday.
That's the lowest growth since 2006, when deliveries shrank 1.2 percent, and compares with the 7.43 million average of three analysts surveyed by Bloomberg News.
Chung, 74, told employees to be more proactive to changes in the markets to meet the business targets.
Both companies are also coping with a domestic currency that's appreciated more than any other major Asian currency in the past six months, undermining their ability to compete against Toyota Motor Corp. and General Motors globally.
"2013 will be a very difficult year as the ongoing European crisis and the slowing global economy affect international and domestic markets," Chung said.
Hyundai, whose shares advanced 2.6 percent last year, fell as much as 1.6 percent in Seoul trading Wednesday as the benchmark Kospi index rose. Kia, which declined 15 percent in 2012, dropped as much as 0.9 percent.
Hyundai and Kia's 2013 growth forecast is half the 8 percent increase posted last year. The automakers sold an estimated 7.12 million vehicles in 2012, exceeding their goal of 7 million units, Chung said.
Conservative forecaster
Lee Sang Hyun, an analyst at NH Investment & Securities Co. in Seoul, said Hyundai and Kia typically provide conservative targets for sales and will probably keep increasing market share in Europe and outperform in China.
Lee has buy ratings on both stocks. Hyundai forecast its sales will climb to 4.66 million vehicles -- or 60,000 units more than the average analyst estimate.
Kia predicted deliveries will increase 1.1 percent to 2.75 million units, or about 3 percent shy of the average estimate.
The combined forecast exceeds Hyundai's own projections for industry growth of 3.6 percent.
Demand in China, the world's largest auto market, will help Kia and Hyundai exceed their target of delivering 1.25 million vehicles in the country in 2012, they said in October, while sales rose in Europe on demand for models including the i10 minicar and Cee'd hatchback.
China is Hyundai's biggest market, accounting for 18 percent of sales in the first nine months of 2012, followed by the United States at 17 percent.
The United States is Kia's largest market, contributing 21 percent of sales in the period, while Korea is the second biggest, responsible for 17 percent.
Hyundai's profit will probably increase 7 percent to 9.65 trillion won ($9.1 billion) in 2013, according to the average analyst estimate compiled by Bloomberg. Kia's net income will probably climb 6.9 percent to 4.45 trillion won, based on the average estimate.
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