Hyundai Motor Co, South Korea’s biggest carmaker, slashed this year’s domestic sales target by 6 percent as rising oil costs and a weakening economy damp demand for automobiles.
Hyundai aims to sell 630,000 cars, including its Sonata sedan and Santa Fe sport-utility vehicles, in the domestic market this year, down from an earlier target of 670,000, the Seoul-based automaker said yesterday in an e-mailed statement. The automaker sold 625,275 vehicles in the local market last year.
Hyundai, its affiliate Kia Motors Corp and other carmakers in the country are facing slowing demand at home as consumer confidence in Asia’s fourth-biggest economy slumped to the lowest level in more than seven years in the second quarter. Rising food and oil prices have cut the purchasing power of potential car buyers in South Korea.
“Even the lowered target may not be easy for Hyundai to meet at this point,” said Park Hwa-jin, an analyst at Shinyoung Securities Co, who has a “buy” rating on the stock.
“The good news is its exports are doing great and the company will be able to offset the lower domestic sales with sales in overseas markets,” Park said.
Hyundai Motor shares have risen 0.3 percent this year in Seoul trading, outperforming the benchmark Kospi index’s 17 percent slide.
Domestic sales at Hyundai declined 15 percent last month, the first drop in six months, as higher prices for oil and consumer goods dampened demand for cars, the company said last Tuesday. Exports gained 20 percent last month as its fuel-efficient model won more customers out of South Korea, leading an 11 percent increase in overall sales for Hyundai last month.
The carmaker is also concerned about the cooling customer sentiment amid rising oil and other material prices.
During the first half, Hyundai sold 1.48 million vehicles, 14 percent more than a year earlier, the statement said. Domestic sales grew 4.8 percent while exports rose 17 percent, led by demand in China, India and other emerging markets, it said last Tuesday. Still, the carmaker reiterated its global sales target this year of about 3 million units.
Separately, Kia, South Korea’s second-biggest carmaker, raised its local sales target this year by 11 percent to 364,000 units from the previous 327,000 goal. The Seoul-based company expected higher sales of its fuel-efficient models including the Morning minicar and new models to be sold in the second half of the year, it said yesterday in an e-mailed statement.
Domestic sales of Kia’s Morning minicar more than tripled to 47,569 units during the first half from 12,937 a year earlier, the company said last Tuesday. Local sales totaled 154,030 units in the first six months of this year, rising 15 percent from a year before.
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