Hyundai’s Beijing factory. Picture: REUTERS
Hyundai’s Beijing factory. Picture: REUTERS

Seoul — Hyundai Motor, South Korea’s biggest car maker, forecast a slowdown in sales in 2018 as political risks dent demand for its vehicles in the world’s largest markets.

Hyundai Motor and affiliate Kia Motors said on Tuesday their combined sales in 2017 dropped 7% to 7.25-million units, the least in five years and a million short of its record target.

Citing stalling global economic growth, rising protectionism and dangers posed by geopolitics as threats, the companies set a goal to sell 7.55-million vehicles in 2018.

With Ford Motor on its heels, Hyundai Motor group is fighting to maintain its rank as the world’s fifth-biggest car maker after underperforming rivals in the US, where a booming demand for sport utility vehicles (SUV) exposed the Korean maker’s dearth of models.

Hyundai is also preparing to catch up with makers such as Volkswagen and Nissan Motor in the field of technology as the industry spends billions on autonomous and electric vehicles.

Shares of Hyundai Motor fell 4.2%, the most in about three weeks, while those of Kia fell 2.1% in Seoul on Tuesday, after they failed to meet their targets for the third consecutive year.

Chinese blow

"I don’t expect them now to go back to the time they sold about 8-million cars," said Kim Joon-sung, an analyst at Meritz Securities, adding that the car makers were still recovering from the blow they received in China in 2017.

Hyundai was hit by a boycott in China, which halved sales in its biggest market, after South Korea decided to deploy a US missile defence system on its soil, which China considered a threat.

To help reclaim some of the markets, Hyundai is planning to expand its SUV line-up in China from four to seven by 2020, while in the US it proposes to introduce new SUVs such as the small Kona and a new Santa Fe early in 2018.

The two car makers are also bolstering investments in new areas such as autonomous driving technology, artificial intelligence and environmentally friendly vehicles.

Hyundai set up new research institutes in 2017, including one in Silicon Valley, to catch up on these new technologies.

They are also planning to bring to market as many as 38 green cars by 2025, including an electrified Kona SUV with a range of 400km and a Genesis luxury electric vehicle with a range of 500km.

Bloomberg

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