Multinational automotive manufacturers, Hyundai Motor and Kia Motors predicted on Tuesday that their sales growth this year will be about 4 percent. This slow rise may be due in part to their small foothold in the US SUV market as well as the tense diplomatic relations with China.
While Hyundai Motor and Kia Motors have been growing steadily in the US for the past five years, the latest projection is the lowest it has ever been since 2009. The two manufacturers initially estimated that about 8.25 million vehicles will be sold worldwide, however, that number was brought down to 7.25 million units.
According to Hyundai Motor, the market environment is “expected to be difficult due to a slowdown in major markets like the US and China, prolonged low growth in the global economy and trade protectionism in major countries,”
Automobile sales fell 7 percent between 2016 and 2017 marking their Kia and Hyundai’s third consecutive annual miss.
One factor that influenced the latest estimate is the diplomatic relations between South Korea and China. The main issue revolves around Seoul’s decision to incorporate a US missile defense system, a response to North Korea’s nuclear programme. Thus China has the ability to limit how many automobiles Hyundai and Kia can sell in that country.
Hyundai Motor shares were down 4.2 percent on Tuesday while Kia Motors had 2.1 percent decline in their stocks.
Hyundai and Kia produce a wide array of SUVs and have done a series of crossovers that were displayed in showrooms across the US. However, collective consensus states that the companies still need to better adapt to the changing mentalities of US buyers.
This sentiment is echoed by Rebecca Lindland, an executive analyst at Kelley Blue Book. According to her, Hyundai is not associated with their SUVs. Instead, consumers only know the company because its known as a “value brand”. She claims that Hyundai is still known for value, however, that value is diminished due to their inexpensive vehicles.
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