Hyundai sales stutter amid China slump

Hyundai, South Korea's largest automaker, will have to sell at least 50 per cent more than its monthly average this year in December to reach its full-year target of 5.05 million vehicles. Such a feat is unlikely, said five analysts surveyed by Bloom
Hyundai, South Korea's largest automaker, will have to sell at least 50 per cent more than its monthly average this year in December to reach its full-year target of 5.05 million vehicles. Such a feat is unlikely, said five analysts surveyed by Bloomberg.PHOTO: EUROPEAN PRESSPHOTO AGENCY

SEOUL • Hyundai Motor is poised to sell fewer vehicles than it projected for the first time since the global financial crisis, after an economic slowdown sapped demand in China and emerging market earnings slumped due to unfavourable exchange rates.

South Korea's largest automaker will have to sell at least 50 per cent more than its monthly average this year in December to reach its full- year target of 5.05 million vehicles. Such a feat is unlikely, said five analysts surveyed by Bloomberg.

They also predict that Hyundai's 2016 sales will be lower than the target set for this year, given the absence of new best-selling models and continued weakness in Russia and Brazil.

Hyundai has benefited in recent years from the surge in demand for automobiles in China, which became the largest market for the carmaker in 2009.

This increasing reliance turned into a drag after economic growth moderated this year and a summer stock market rout dented consumer confidence. Hyundai's push into emerging markets has also met with a slump in the Brazilian real and Russian rouble this year.

"I don't think anyone expected sales in China to plummet as it did this year because we were all used to China being the white knight," said analyst Lee Sang Hyunt at IBK Securities.

The last time Hyundai missed its sales target was in 2008, when the company fell about 327,000 units short of its 3.11 million goal as US demand tanked in the wake of the financial crisis that led to a global recession. The automaker did not issue a target the following year.

Hyundai declined to comment on its target expectations, and plans to report full-year sales data on Jan 4.

The company's shares fell 1.3 per cent to 152,000 won in Seoul, their biggest decline since Dec 11.

Sales in the United States have been a bright spot for Hyundai this year. Deliveries outpaced the industry and rose 5.6 per cent to 698,202 units in the first 11 months. In China, Hyundai's sales fell 6.9 per cent through November to 934,806 units, dragged down by the economy and a shift by consumers from sedans to small crossovers.

Even with a recovery in China, Hyundai will struggle in Russia and Brazil, where a plunge in the rouble and real had lowered the value of repatriated earnings, according to KTB Securities, which expects the two currencies to remain weak against the won in 2016.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 22, 2015, with the headline 'Hyundai sales stutter amid China slump'. Print Edition | Subscribe