Hyundai, Kia 2006 sales target trimmed

Seoul, Oct 12: Hyundai Motor group cut its 2006 combined sales target for Hyundai Motor Co. and Kia Motors Corp. by up to 6 percent due to summer strikes and amid weaker domestic demand.

But Kim Dong-jin, Hyundai's vice chairman and CEO said on Thursday that sales would rebound in 2007, without elaborating.

Analysts said Hyundai may indeed achieve higher sales thanks to lower oil prices next year, but still faces weak domestic demand amid a slowdown in Asia's third-largest economy and unstable consumer sentiment due to North Korea's nuclear issues.

They also pointed out a lack of new models to boost sales.

''In 2007, sales are expected to be slightly higher than this year, but I don't see a sharp turnaround as the global economy may deteriorate,'' said Choi Dae-sik, auto analyst at CJ Investment.

On Wednesday, GM Daewoo Automotive and Technology said it expected its sales growth to slow to 12.5 percent next year from 38 percent so far this year, as the impact of new product launches wears off.

Hyundai's Kim said the group slightly changed its business plan since Hyundai and Kia, the world's sixth-biggest auto maker by sales volume, were hit by strikes during the summer.

''Late last year, we set our 2006 production target at 4.1 million. However, we reduced our production or sales volume down to 3.85 million because of labour disputes,'' Kim told reporters on the sidelines of Hyundai's launch of the Veracruz sport utility vehicle. He did not break down the figure for each company.

But sales volume could total 3.9 million units if labour unions cooperate with the company, he said.

Earlier this year, Hyundai, South Korea's top auto maker, said it aimed to sell 2.7 million units in 2006, up 15 percent from last year. Affiliate Kia said it targeted 1.4 million vehicle sales this year, 18 percent more than 2005.

In January-September, Hyundai sold 1.9 million units, up 9.1 percent from a year earlier, and Kia sold 962,308 vehicles, 4.5 percent more than a year ago.

Unionised workers at Hyundai stopped work for several hours each business day for a month from late June as they sought higher wages and other incentives. Hyundai has said the strike cost 1.3 trillion won ($1.36 billion) in lost output.

Kia's union members also staged work stoppages.

Analysts expect Hyundai and Kia to post lower profits for the third quarter because of the strikes.

Hyundai is expected to post a 20 percent fall in full-year net profit to 1.86 trillion won, according to forecasts by 25 analysts compiled by Reuters Estimates, while Kia's full-year profit is forecast to drop 45 percent to 680.9 billion won.

Hyundai on Thursday unveiled the Veracruz, which it hopes will compete with Toyota Motor Corp.'s Lexus RX 350 in overseas markets including the United States, the world's top auto market.

Hyundai aims to sell 20,000 units of the new SUV at home and 65,000 abroad next year. In 2010, Hyundai aims to sell 100,000 with 76,000 selling in overseas markets.

Shares in Hyundai ended up 1.16 percent at 78,500 won, outperforming the broader market's <.ks11> 0.47 percent gain. Kia rose 0.69 percent to close at 14,900 won.

Reuters