Published : Oct. 13, 2016 - 15:50
Hyundai Motor, the nation’s largest carmaker, is expected to see its global sales decline for the first time in 18 years, due to the prolonged recession in emerging markets and slowing demand in its home turf.
The carmaker had set an annual sales target of 8.13 million units in January, slightly lower than last year’s 8.2 million. But the South Korean carmaker appears to be in a difficult situation to reach that goal, some market analysts said, citing its slowing sales.
As of September, the company sold 5.62 million vehicles in and out of the country, a 1.8 percent decrease from the year before. Judging from the sales pace, it will be hard for the company to sell more cars than last year for the remaining three months of this year, they said. Hyundai and its sister company Kia Motors sold a combined 8.01 million vehicles last year.
In addition to the declining sales, Hyundai Motor is anticipated to make its lowest operating profit in the third quarter, amid an ongoing labor dispute that has lowered its production capacity for months.
HMC Investment Securities, a local brokerage under Hyundai Motor Group, predicted Thursday that the South Korean carmaker would have 1.12 trillion won ($986 million) in operating profits between July and September, a 25.3 percent decrease from the same period last year.
“With declining demand in the domestic market, the delay in emerging market recovery, the strong Korean currency as well as the strike, sales generated from local plants will reach its lowest mark since Q3 in 2009,” said Lee Myung-hun, analyst at the brokerage in his report.
The company is to post its third-quarter earnings on Oct. 27.
Numbers including the operating profit and profit-to-sales ratio will at their lowest since 2010, considering slowing sales and the losses inflicted by the suspension of its production line due to unionized workers staging protest, other analysts said.
The labor and management of Hyundai Motor have reached a second tentative agreement on a wage deal, two weeks after workers staged a full strike for the first time in 12 years. The strike is estimated to have caused production damage worth 3 trillion won.
Despite the gloomy outlook, Hyundai is betting on sales of its new luxury sedans this year.
It plans to release the sixth generation of Grandeur within this year.
“The company is in a difficult situation, but will overcome the crisis by expanding the market entry of luxury sedans,” a Hyundai official said.
By Cho Chung-un (christory@heraldcorp.com)