Hyundai Motor and affiliate Kia expect global auto sales to rise 2% in 2024, even as last year’s sales fell short of target due to supply chain disruptions. The duo sold 7.3 million vehicles in 2023, about 3% less than their combined target of 7.52 million, mainly due to a challenging economic environment, including rising interest rates and inflation that pushed vehicles out of the reach of some buyers.
But this year, the duo has a more substantial base, with demand boosted by a new generation of models and the company’s push into higher-margin SUVs and electric vehicles. In the second quarter, sales of the new Kia Sportage, Sorento, and Optima SUVs were strong, especially in the U.S., where they accounted for most of Kia’s global sales growth. The firm also saw brisk demand for its popular Elantra HEV and N electric vehicle models in the U.S. and other markets.
Analysts say that despite the headwinds, Hyundai and Kia’s sales targets appear reasonable considering the pent-up vehicle demand. “Hyundai and Kia are seeing more customers waiting in line to purchase vehicles than before,” said Kim Gwi-yeon, an analyst at Daishin Securities. “The firms have a robust product lineup and a lot of sales channels to tap into.”
Hyundai aims to boost global sales by 10% in 2023, with 3.54 million units sold overseas and 781,000 at home, helped by optimized business strategies tailored for each region. The firm also plans to increase its production of SUVs, electric vehicles, and other high-margin models.
Meanwhile, Kia is focusing on expanding its presence in the growing markets of China and India with new local production and optimization of sales and service networks. Seo said the firm also aims to produce key E.V. models in the U.S. as early as 2024 in compliance with the U.S. Inflation Reduction Act.
Kia’s other main launches this year include a revamped Kona small SUV, which becomes a more practical proposition this time, its new Santa Fe large SUV, and the hyped Ioniq 5 N electric hot hatch.
Both companies also plan to expand their connectivity businesses with new smartphone and virtual reality (V.R.) applications, which they believe will be increasingly crucial for the auto industry as the world shifts toward mobility-as-a-service offerings. Fitch Ratings said that the duo also has a solid financial profile with a significant liquidity buffer and a low debt level. That gives them the flexibility to cope with future challenges. Fitch also praised the companies for improving efficiency and cutting costs. That has led to better margins for the duo in recent years. The ratings agency sees those margins improving further this year and in the medium term. It expects the two companies to improve operational efficiency further through cost cuts and increasing production of profitable models such as E.V.s. In the long term, Fitch expects the companies to develop and market vehicles with integrated intelligent technologies and services.
