South Korean automaker Hyundai Motor and affiliate Kia Motors turned in their lowest sales in seven years in 2019 as their sales in China slumped, missing their target for a fifth straight time, but forecast better figures for 2020.
Weak 2019 sales speak about the challenges Hyundai Motor Group has been dealing with, including a range of annual profit declines at Hyundai and higher costs to develop the future innovations even as the worldwide auto market stagnates.
“The market environment is highly uncertain and internal and external challenges will intensify,” Group heir apparent Euisun Chung stated on Thursday. But he repeated that the Group would keep focusing on profitability and technology investment.
Hyundai and Kia reported a 3% decline in their combined worldwide sales to 7.19 million vehicles for this year, falling short of their target to sell 7.6 million vehicles.
Their sales have dropped in China, the world’s biggest auto market, offsetting a recovery in the United States where demand for their new sport utility vehicles and a favorable currency exchange rate have helped.
Hyundai and Kia, however, state they expect combined sales to increase 5% to 7.54 million vehicles in 2020, without providing any more details. That compares with a 0.4% growth in a worldwide market projected by its think tank and a 0.9% contraction forecast by Moody Investors Service.
But analysts warn it will be a daunting task for the automakers, together with the world’s fifth-biggest by sales, to fulfill their target for this year.
“I think Hyundai Motor’s target may be too aggressive … my guess is that it assumed recovery in China, but that’s not easy,” stated Kim Pyung-mo, an analyst at DB Financial Investment.
“Hyundai underperformed the (China auto) market in November, and it’s too early to state that China’s industrial demand will be observing a complete recovery.”
The global auto market is largely expected to stay slow in 2020, as demand falls further in the United States and Europe, indicating more competition for Hyundai and Kia.