On Tuesday, Hyundai Motor and Kia Motors indicated a 4% sales growth right when the new year started and believes that their slow recovery was linked to their lack of SUV sales in the U.S. as well as tensions with China. Based in South Korea, the two car manufacturers expected demand to slow down in the U.S. and Chinese markets following a predicted sales target from 7.25 million cars last year, to 7.55 million cars this year. Since 2016, sales fell 7% and was short of a target of 8.25 million vehicles which marks their third consecutive annual miss. As buyers in the U.S. and China prefer SUVs over sedans, Hyundai shares reported a drop of 4.2% while Kia shares fell 2.1% lower.
On Tuesday, the Korean won strengthened to a more than 3 year high against the U.S. dollar which threatens the competitiveness of South Korean exporters as Japanese rivals benefit from the weakening yen. Hyundai’s sedan sales in China are expected to drop due to the future expiration of a tax cut on small engine vehicles. The company plans to offer and sell more SUVs in the U.S. and China this year as they look into remodeling and redesigning of some models.
“The market environment is expected to be difficult due to a slowdown in major markets like the U.S. and China, prolonged low growth in the global economy and trade protectionism in major countries,” Hyundai Motor said in a statement.