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Korean automakers to keep momentum this year

Jan. 3, 2012 - 17:04 By Korea Herald
HONG KONG (Yonhap News) - South Korean automakers are likely to maintain upward momentum this year, driven largely by brisk overseas demand, experts said Tuesday.

Hyundai Motor Co. and Kia Motors Corp. expect weaker growth in sales this year, citing a slow-down in the global auto industry.

The two flagship companies of Hyundai Motor Group saw their combined sales pass 6.59 million units last year, exceeding the 6.33 million sales target set in early 2011.

“Hyundai and Kia are aiming for combined sales to be up 6 percent to 7 million units in 2012, and we see some upside potential to this goal due to strong prospects in the U.S. and Europe,” said Sanjeev Rana, a research analyst at Deutsche Bank, suggesting demand for cheaper and smaller cars will grow in those markets.

“We also think the momentum of (South Korea‘s) domestic auto sales is likely to recover in the first quarter of 2012, when additional tax cuts on new car purchases come into effect, which should unleash pent-up demand from the last few months.”

Paul Hwang, an analyst at Goldman Sachs, said South Korean carmakers will remain competitive against their foreign rivals.

“We forecast global shipments of Hyundai Motor and Kia Motors will increase 6 percent and 9 percent on-year respectively in 2012, slower than the 19 percent and 12 percent on-year growth posted in 2011, yet still in line with or slightly better than the expected 6 percent on-year global auto market growth in 2012,” Hwang said.

Morgan Stanley’s Park Sangkyoo, however, remained cautious.

“Results in 2012 will, once again, be determined by how well overseas sales perform relative to weakening domestic sales,” he said.

Park added that new models to be launched this year, Hyundai‘s Santa Fe and Kia’s K9, are expected to lead global sales.