Weak July sales dim outlook for Hyundai, Kia

SEOUL, Aug. 3 (Yonhap) -- Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. saw their combined sales drop some 8 percent on-year in July due to lackluster exports, sparking concerns the top two carmakers in South Korea could miss their annual sales targets.

According to their latest sales data, industry leader Hyundai Motor sold 357,795 cars in July, down 6 percent from a year earlier, while Kia Motors saw its sales fall 10.7 percent on-year to 234,527 units.

Their combined sales came to 592,322 units, down 7.9 percent from a year earlier, the data showed. The July figure followed a 2.1 percent on-year gain they registered a month earlier.

During the January-July period, their cumulative combined sales stood at 4,537,583 units, a 3.2 percent decline from the same period a year earlier. The decline was worse than the 2.4-percent drop tallied during the first half of this year.

Hyundai Motor Group, which holds the two carmakers under its wings, vows to sell around 8.2 million cars this year, which is 2.5 percent more than 8 million units sold in 2014, a target it barely achieved with last-month marketing and promotion efforts.

Citing industry sources, Yonhap earlier reported that Hyundai Group had "internally" lowered its annual target in consideration of poor sales performance and bleak market situations marred by heated-up competition from European and Japanese rivals armed with a price advantage from their relatively weak local currencies.

The group denied the report, renewing its commitment to beat the target by making "all-out" efforts till the end of the year, pinning their hopes on new cars to be launched in the second half.

"Chances are growing that they cannot beat the annual target. Considering the latest figures, it has become almost impossible to make it physically," said Kim Jin-woo, an analyst at Korea Investment & Securities. "It would be impossible to attain the target without excessively aggressive marketing and discounts."

The major hurdle for the two automakers seems to be worsening overseas market conditions.

Hyundai Motor did relatively well in the domestic market by selling 599,957 cars last month, up 0.5 percent from a year earlier but its overseas sales shrank 7.3 percent on-year to 297,838. Kia Motors also reported setbacks by selling 15.4 percent less than a year earlier overseas, though its domestic sales advanced 14 percent.

Hyundai Motor, in particular, attributed the sluggish overseas demand to unfavorable market conditions such as the weak euro and Japanese yen along with less demand in emerging markets.

"Growth is slowing centering on emerging markets with uncertainty deepening due to currency volatility, posing challenging market conditions," Hyundai Motor said in a press release. "Competition is also intensifying among rivals."

Market analysts said that they need to wait until detailed sales performances come out, especially in China, one of the world's largest car markets, to provide a more accurate assessment of the two carmakers.

The impact from launching new cars in the second half of this year by the automakers should also be reflected in making a final "verdict" on their performance for this year, some added.

Meanwhile, South Korea's five automakers, including GM Korea Co., Renault Samsung Motors Co. and Ssangyong Motor Co., sold a combined 681,141 cars last month, down 5 percent from a year earlier.

Their sales during the first seven months of this year came to 5,116,851 units, down 2.1 percent from the same period a year earlier.

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