Hyundai growth forecast lowest since 2003

SEOUL (AFP) - Hyundai Motor Group said on Thursday it expects sales to grow in 2014 at their slowest pace in more than a decade, as it is hit by global economic uncertainty.

The firm said that combined with its smaller affiliate Kia it sees sales of 7.86 million this year, up 3.9 per cent from the 7.56 million in 2013. The growth figure is the weakest since 2003.

"Market competition is intensifying as the global economy enters the era of slow growth, and uncertainty increases as technological convergence sparks more changes in the industry," chairman Chung Mong-Koo said in his New Year message to employees.

"We need to... dramatically expand investment in developing innovative technologies like environmentally friendly green cars or smart cars equipped with cutting-edge technologies," he said.

Hyundai Motor and Kia, which make up the world's fifth-largest automaking group, sold 7.12 million cars worldwide in 2012.

The company is set for a tough year as a weaker Japanese yen sparked by Tokyo's bid to support exports has offered price advantages to rivals such as Honda and Toyota.

The yen tumbled against the dollar last year owing to an aggressive monetary easing programme by the Bank of Japan put in place as part of Prime Minister Shinzo Abe's drive to kickstart the world's third-largest economy.

At the same time the Korean won has steadily risen against greenback - hitting its highest level for two years - hurting the competitiveness of exporters such as Hyundai and Samsung, which compete against Japanese rivals in major global markets.

The won also on Thursday touched its highest level against yen since September 2008.

Hyundai shares dropped 5.07 per cent to close at 224,500 won (S$269) on Thursday on disappointment over the low sales target.

"It's hard to imagine a rebound in Hyundai's share price until the weakening of yen is substantially curbed," said Korea Investment & Securities analyst Suh Sang-moon.

Join ST's Telegram channel and get the latest breaking news delivered to you.