Carmakers and World Cup sponsors Hyundai and Kia today braced investors for their slowest sales growth in more than a decade as a stronger currency hampers the export efforts of the South Korean duo.
Hyundai, which owns a near 50% stake in affiliate Kia, is suffering at the hands of Japanese rivals bolstered by the Bank of Japan’s efforts to kickstart its economy through massive stimulus, weakening the yen.
Today the Korean won hit its highest level for more than five years against both the dollar and the yen, prompting talk in Seoul of government intervention in currency markets to help exporters.
The two companies — together the world’s fifth biggest car maker by combined sales — export about two-thirds of their cars. But the stronger won means Kia and Hyundai will see sales growth slow to just 4% in 2014, their weakest since 2003.
Japan’s stimulus efforts are unwinding the advantage the pair have enjoyed since the financial crisis, when the yen — a safe haven — rose rapidly.
Hyundai chairman Chung Mong-koo also warned of a tougher business climate. “Competition among companies is intensifying, as the global economy has entered an era of low growth,” he said. “Technological convergence leads to change in the industry, and adds to uncertainty.”
