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Hyundai poised to miss sales target for first time since 2008
[SEOUL] Hyundai Motor Co 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 unfavorable exchange rates.
South Korea's largest automaker company 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, according to 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. The 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 real and ruble 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 Lee Sang Hyun, an analyst at IBK Securities Co.
"Although sales in China may improve in 2016, from how the market situation is expected to play out, things don't look all that exciting." 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 didn't issue a target the following year.
Hyundai declined to comment and plans to report its full- year sales figures on Jan 4.
US sales 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, spurred by sales of the Tucson and Santa Fe SUVs amid a decline in gasoline prices.
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.
Deliveries rebounded in October after a government tax cut on smaller vehicles. There are also plans to introduce a new round of subsidies for auto purchases in the country's rural areas, people familiar with the matter said this month.
Even with a recovery in China, Hyundai will struggle in Russia and Brazil, where a plunge in the ruble and real have lowered the value of repatriated earnings, according to KTB Securities Co, which expects the two currencies to remain weak against the won in 2016.
"It's unlikely that the situation in Russia and Brazil will turn around next year," said Moon Yong Kwon, an analyst at KTB Securities. "In 2016, the key will be to take advantage of the tax break in China to recover sales and production rate in the country."