South Korean Automakers' December Sales Rise 25% on Exports

Seoul Jan. 3, 2005; Iain Wilson writing for Bloomberg reportesd that South Korean automakers, led by Hyundai Motor Co. and affiliate Kia Motors Co., sold 25 percent more vehicles in December because of demand in the U.S and China for models such as the Hyundai Sonata.

The nation's five carmakers sold 467,042 vehicles last month, compared with 373,050 a year earlier. Exports rose 36 percent to 369,514 units, while domestic sales fell 3 percent to 97,528 vehicles.

Hyundai and its smaller rivals are boosting production and sales overseas as orders at home decline because a tightening of consumer credit left many people unable to afford new vehicles. Hyundai and Kia are building plants overseas as part of plans to become one of the top five automakers in the world by 2010.

``Last year was a great year for exports and although this year's growth isn't going to be as high, it's still going to be about 15 percent to 20 percent, which is still pretty good,'' said Yang You Sik, who manages the equivalent of $530 million at LG Investment & Securities Co. in Seoul. ``Local consumption hit bottom last year and will probably recover in the second half of this year.''

Yang said he's ``overweight'' on Hyundai Motor, which accounts for about a 10th of his stockholdings. The automaker's market capitalization is about 3 percent of the benchmark Kospi index in Seoul.

Hyundai Motor's shares were unchanged at 55,500 won in Seoul. The stock gained 10 percent last year. Kia's stock fell 2.8 percent to 10,600 won.

Hyundai Motor, South Korea's largest automaker, sold 21 percent more vehicles last month as exports to the U.S. and Europe surged and domestic demand rebounded.

Hyundai Motor sold 230,437 Sonatas, Santa Fe sport-utility vehicles and other models in December, the carmaker, based in Ulsan city, south of Seoul, said in a filing to the Korea Stock Exchange today. Exports, including sales from its factories in China, India and Turkey, rose 27 percent to 179,364 vehicles, while sales at home rose 4.6 percent to 51,073.

Hyundai's U.S. Expansion

Kia's sales rose 37 percent last month to 123,321 units. Its exports rose 53 percent to 103,749 vehicles and domestic sales fell 11 percent to 19,572.

Hyundai Motor said on Dec. 29 it plans to make 150,000 vehicles at its plant in Montgomery, Alabama, which will open in March. That's 61 percent than its original forecast, and put the automaker on target to make 300,000 vehicles in 2006.

Hyundai Motor today said group sales, including those of Kia, will rise 17 percent to 84.9 trillion won ($81.9 billion) this year on increased exports.

Hyundai forecast revenue to rise 12 percent to 36.2 trillion won and unit sales to rise 14 percent to 2.4 million cars in 2005. Kia, the nation's second-largest carmaker, projected a 25 percent increase in revenue to 20.1 trillion won and unit sales to increase 24 percent to 1.3 million.

``Over the long term, these foreign plants are going to make Hyundai more competitive in the global arena and help its business,'' said Kim Seong Ki, who helps manage $190 million of stocks, including Hyundai Motor, at Chohung Investment Trust Management Co. in Seoul.

`Deteriorating Conditions'

Hyundai, which sold 74 percent of its cars overseas last year, said it faces deteriorating business conditions in its home market next year.

This year ``will usher difficulties such as a domestic economic slump, a slowing global economy and an unstable currency,'' Hyundai Motor Chairman Chung Mong Koo said in a press statement.

Hyundai said it will invest 2.8 trillion won on research and development, as well as capital expenditure will this year, compared with 2.7 trillion won in 2004, the automaker said. Kia's spending will rise to 1.9 trillion won from 1.5 trillion won last year, it said.

GM Daewoo Auto & Technology Co., a South Korean automaker formed by General Motors Corp. and its partners, sold 91,468 of its Magnus, Kalos and other models last month, 32 percent more than a year earlier. Exports rose 36 percent to 81,388 units and domestic sales rose 6.2 percent to 10,080.

Ssangyong Motor Co., South Korea's fourth-largest automaker, sold 11,170 of its Rexton, Korando and other sport-utility vehicles in December, 21 percent fewer.

Renault Samsung Motors Co., which is 70 percent owned by France's Renault SA, said sales rose 19 percent to 10,646 vehicles, with domestic sales up 18 percent to 10,433 units. Exports rose to 213 vehicles from 56 a year ago.