Hyundai-Kia see 2015 sales growth weakest in 12 years

By Staff Reporter | Jan 02, 2015 07:45 AM EST

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(Reuters) - Hyundai Motor Co (005380.KS) and affiliate Kia Motors Corp (000270.KS) forecast sales this year to grow at the slowest pace since 2003, hampered by capacity constraints and a weaker yen that is likely to give Japanese rivals an edge in key markets.

Hyundai and Kia, together the world's fifth largest automaker by sales, said on Friday they aim to sell 8.2 million vehicles in 2015 - a 2.5 percent increase from a year ago and the smallest rise since 2003, when sales grew 2 percent, company data shows.

The expansion - in line with the 8.27 million average forecast of five analysts polled by Reuters - also lags the 3.9 percent increase in vehicle sales forecast for the global market for this year.

"While low growth continues for the world economy, political uncertainty grows in emerging markets and competition is intensifying among automakers," Chung Mong-koo, chairman of the family-run conglomerate, said in a statement.

Hyundai-Kia have seen sales growth slow since Chung put in place an unofficial moratorium on new factories about two years ago to focus on quality.

The duo, however, said in 2014 that they would build factories in China and Mexico to expand their overall capacity, but production from these plants will not start until later next year.

Hyundai's internal think-tank said last week it expected the competition from Japanese automakers to remain strong in 2015, especially with as the Japanese government is likely to maintain its policy of keeping the yen weak to boost exports.

Next year, Hyundai is also expected to launch revamped versions of its Tucson sport utility vehicle and the Elantra compact, models seen key to reviving sales after the lukewarm reception for its Sonata sedan.

The duo have in the past given conservative sales targets and beat them. In 2014, sales rose 5.8 percent to 8 million vehicles, versus its earlier target of 7.86 million due mainly to strength in China and other emerging markets.

Shares in Hyundai Motor and Kia Motors slipped 0.6 percent each in a flat market .KS11during morning trading.

Hyundai Motor stocks fell 29 percent in 2014, a year of sluggish earnings and investor outrage over a $10 billion property purchase in Seoul. Kia shares fell 7 percent versus a 5 percent decline in the broader market .KS11.

(Reporting by Hyunjoo Jin; Editing by Miral Fahmy)

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