South Korean carmakers Hyundai Motor Co. and Kia Motors Corp. expect to post a 4-percent gain in sales in 2014 to 7.86 million vehicles, their weakest in eight years. The forecast is short of the 8 million units average estimate of five analysts surveyed by Bloomberg News. Chung Mong Koo, chairman of both Hyundai and Kia, said that the carmakers invest to improve vehicle safety and technology as rivalry in the industry gets stiffer and the global economy reaches a "low growth era."
Chung’s forecast came after Hyundai disclosed a change of leadership in the United States where its sales have been experiencing a slump. Hyundai has named David Zuchowski as head of its US operations after losing market share in the country.
Also hurting the carmakers is the appreciating South Korean won that has gained 7.9 percent against the dollar and 13 percent against the Japanese yen in the past six months.
"The strong won against the yen that intensifies the competition with Japanese automakers remains a concern for Hyundai and Kia," remarked Shin Chung Kwan, an analyst at KB Investment & Securities Co.
Despite the unfavorable currency, Shin told Bloomberg they still expect Hyundai and Kia to exceed their sales targets in 2014 to around 8 million vehicles combined.
On the other hand, Hyundai and Kia recently agreed to spend up to $395 million to settle lawsuits in the US related to claims that the carmaker overstated the fuel-economy ratings of their vehicles. [source: Bloomberg]