SEOUL (Reuters) – South Korea’s Hyundai Motor Group flagged another year of tepid car sales growth on the back of a slow 2018, saying trade protectionism added uncertainty and major markets such as the United States and China remained sluggish.
Chief Vice Chairman of Hyundai Motor Group Chung Eui-sun delivers his speech during the company’s new year ceremony in Seoul, South Korea, January 2, 2019. REUTERS/Kim Hong-Ji
In his first New Year address to employees, group heir apparent Euisun Chung said Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS) would together launch 13 new or face-lifted models in 2019.
He also promised to complete a restructuring of South Korea’s second-biggest conglomerate, which is expected to pave the way for him to formally succeed his octogenarian father as head of the group.
The complicated succession plans come as Hyundai contends with a bunch of problems that have cost it market share in China and the United States and stalled its rise up the ranks of global automakers.
It missed a boom in sports utility vehicles, faces potential U.S. tariffs and a U.S. investigation over how it handled in vehicle recall, and lost ground in technological advances such as self-driving cars.
“Business uncertainties are heightening as the global economy continues to falter. Walls of protectionism are being constructed around the world,” Chung, 48, told hundreds of employees at the group’s headquarters in Seoul.
“Internally, we face challenging tasks such as stabilizing business in major markets like the U.S. and China, while simultaneously enhancing our responsiveness to drive future growth.”
Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS) – together the world’s fifth-biggest automaker – set what they called a “conservative target” of 7.6 million vehicle sales in 2019.
This compares with analysts’ estimate of 7.3 million to 7.4 million vehicle sales last year, the auto conglomerate said, or a 2.7 percent to 4 percent increase. It had sold 7.25 million vehicles in 2017.
Morgan Stanley expects global auto production to fall 1 percent in 2019, the first drop in nine years.
Hyundai and Kia will announce 2018 sales results later on Wednesday, likely the fourth consecutive year of missed annual sales targets, analysts said.
“Hyundai will be launching new models, but competitors will be also doing so, making it difficult for Hyundai to increase shares in the sluggish markets in China, U.S. and Europe,” said Sean Kim, an analyst at Dongbu Securities.
Hyundai Motor shares fell 3.8 percent and Kia Motors slumped 3.1 percent, while the wider market .KS11 was down 1.5 percent in afternoon trade.
The group said it would launch a premium Genesis SUV and the Sonata sedan this year, among other new models.
Hyundai would launch a pilot service of its autonomous taxi in South Korea by 2021 and expand partnerships with leading players in that area, Chung said.
Chung also pledged to “actively communicate with” shareholders, an apparent reference to U.S. hedge fund Elliott which effectively scuttled a previous restructuring plan last year.
Reporting by Hyunjoo Jin and Ju-min Park; Editing by Sayantani Ghosh and Stephen Coates
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