Seoul - South Korean auto makers Hyundai Motor Co and Kia Motors Corp are bracing for their most sluggish growth in annual sales since 2003 as the weakening of the yen fuels exports from Japanese rivals.
Hyundai and its affiliate Kia, together ranked fifth in global car sales, aim to boost global sales by 4 percent this year to a combined 7.86 million vehicles, the pair said in regulatory filings on Thursday.
Growth will come from revamped versions of key models and increased production capacity in China.
The forecast increase is the lowest since 2003's 2.3 percent and is bleak by comparison with breakneck growth at one of the auto industry's biggest success stories during the global economic downturn at the end of the last decade.
It's a fresh challenge for Hyundai chairman Chung Mong-koo as the company shakes up United States management amid a fall in market share there, while German rivals encroach on its once-impregnable domestic stronghold.
“Competition among companies is intensifying, as the global economy has entered an era of low growth,” Chung said in a New Year message to employees.
The 2014 sales target would be in line with the global auto market's projected sales growth of 4 percent.
At their growth peak in 2010, Hyundai and Kia's annual sales climbed 24 percent as the weaker Korean won allowed them to offer stylish, feature-loaded new cars at affordable prices.
That price advantage has been waning.
The won appreciated by more than 22 percent against the yen in 2013.
The Japanese currency also weakened versus the dollar, making exports from Japanese car makers like Toyota Motor Corp, Honda Motor Co and Nissan Motor Co more affordable by comparison.
The yen's fall has been stoked by Japan's attempts to support its export industries and pull its economy out of a two-decade slump.
Senior officials in South Korea and China earlier this week expressed concerns that their own exporters could be hurt as a result.
In regulatory filings on Thursday Hyundai said it was targeting sales of 4.9 million vehicles this year, while Kia's goal is to reach 2.96 million.
For 2013, the pair said they saw sales rise 6 percent to 7.56 million vehicles combined as growth in China and Brazil offset a lacklustre showing at home.
In South Korea, auto makers like Germany's Volkswagen AG have been boosted by a free trade pact between the European Union and South Korea.
The 2013 showing was better than the original Hyundai-Kia target of 7.41 million.
But at 6 percent, the growth rate was below the previous year's 8 percent rise and already in its third straight year of decline.
Hyundai shares, which enjoyed strong gains in recent years, were the worst performers among major automakers in 2013.
The company's stock advanced 8 percent last year, compared with Toyota's 60 percent surge, and a 41 percent jump at General Motors Co. - Reuters