SEOUL (Reuters) - South Korea’s biggest automakers Hyundai Motor Co (005380.KS) and affiliate Kia Motors Corp (000270.KS) are targeting a modest 4 percent uptick in global sales this year, their slowest growth in a decade.
Automakers including Japanese rival Toyota Motor Corp (7203.T) are setting conservative sales targets in the face of an uncertain global economy.
Hyundai Motor and Kia, which together rank No.5 in global car sales, are expecting a slowdown in sales growth to a combined 7.41 million vehicles partly also because of capacity constraints and a stronger South Korean currency.
“Hyundai and Kia benefited from the woes of their rivals after the global financial crisis. But now their growth momentum is weakening without the support of the local currency,” said Kim Sung-soo, a fund manager at LS Asset Management.
The won rose to a 16-month-high against the dollar earlier on Wednesday, fuelling investor anxiety over reduced overseas earnings and the price competitiveness of South Korean firms.
The won rose 7.6 percent against the dollar last year, its biggest percentage gain since 2009.
By contrast, the yen is softening, which could tip the competitive balance in favour of Japanese rivals such as Honda Motor Co Ltd (7267.T).
Hyundai Motor's shares ended down 1.1 percent on Wednesday while Kia slipped 0.4 percent, underperforming the wider market's .KS11 1.7 percent gain.
Last year, Hyundai Motor and Kia were the worst-performing stocks among the world’s top five automakers, according to Thomson Reuters data.
After expanding Hyundai Motor and Kia at breakneck speed, Group chairman Chung Mong-koo has slowed capacity building in the past few years to focus on branding and profitability.
This year’s projected sales growth of 4 percent will be the smallest since 2003 when Hyundai and Kia increased sales by 2.3 percent, company data show.
Hyundai Motor is targeting sales of 4.66 million vehicles in 2013, compared with 4.4 million last year, while Kia has set a goal of 2.75 million, almost flat from 2.72 million in 2012, according to regulatory filings.
“Chairman Chung said our maximum capacity is 8 million vehicles. No more than that. Instead, he said we need to move upmarket and raise margins,” a former top Hyundai executive told Reuters.
Hyundai Motor plans to unveil a luxury-concept vehicle at the upcoming Detroit motor show, a spokesman said, without elaborating.
A dearth of new models for Hyundai Motor and Kia this year will also erode sales growth, with analysts saying the next generation of Genesis, Hyundai Motor’s premium sedan, may be unveiled only in late 2013.
Kia plans to launch a new Soul compact car this year, a spokesman said, without elaborating on possible rollout plans for other models.
Hyundai Motor, which started new plants in China and Brazil in 2012, is in a better position to meet any bigger-than-expected increase in demand this year than Kia, which did not add any capacity at all last year.
Global auto demand may grow 5.3 percent to 88.73 million vehicles this year, similar to a projected 5.2 percent pace in 2012, as a flat European market counters higher sales in China and the United States, according to a recent report by South Korea’s auto industry body.
Toyota expects its group-wide global sales to rise 2.2 percent to 9.91 million vehicles this year from a projected 9.7 million in 2012.
“The market environment is expected to be difficult in 2013 because of Europe’s fiscal crisis and the global economic downturn,” Chung, the 74-year-old chairman of Hyundai Motor and Kia’s parent group, said in his annual speech to employees on Wednesday.
Hyundai Motor and Kia sold a combined 7.12 million vehicles in 2012, up 8 percent from the previous year and better than their original target of 7 million.
The duo drove up sales in China when their Japanese competitors were hit by a backlash in a dispute over islands in the East China Sea last year.
In the United States and Canada, Hyundai Motor and Kia’s sales have not been greatly affected so far by their November 2 admission that they had overstated the fuel economy of more than 1 million cars.
Additional reporting by Daum Kim in SEOUL; Editing by Ryan Woo and John Mair