Hyundai cuts and Kia lifts domestic sales target

Hyundai Motor Co 005480.KS, South Korea's top auto maker, said on Sunday it had cut its local sales target for this year by 6 percent as record-breaking oil prices are hitting consumer sentiment in Asia's fourth-largest economy.

But its affiliate Kia Motors Corp (000270.KS: Quote, Profile, Research) and the country’s No.2 car maker said it had raised its domestic sales target by 11 percent, helped by the popularity of its fuel-efficient mini-car and new model launches.

Hyundai, which controls about half of the South Korea’s car market, said in a statement that it aimed to sell 630,000 vehicles in the higher-margin domestic market, compared to its previous target of 670,000 units.

The maker of Sonata sedan and the Santa Fe sport utility vehicle (SUV) sold a revised 625,275 vehicles last year in South Korea.

“We lowered the local sales target as the outlook is not that bright. South Korea’s auto companies have been hit by weaker consumer sentiment because of surging oil prices,” a Hyundai official told Reuters by telephone.

In June, domestic sales of South Korea’s five auto makers fell 7.5 percent from a year earlier as higher oil prices and weaker consumer sentiment hit demand for new models, especially SUVs, Korea Automobile Manufacturers Association data showed.

Hyundai’s domestic sales dropped 14.6 percent from a year ago last month, although its sales for the whole of the first half rose 4.8 percent to 318,756 units, according to the company.

Local sales of Hyundai and other South Korean auto makers are expected to remain sluggish in coming months as fuel prices are likely to rise further, analysts said.

An economic slowdown and higher inflation are also expected to weigh on demand.