[Newsmaker] Hyundai Motor hurt by falling overseas sales

A sense of crisis is escalating at Hyundai Motor as sales by the nation’s largest carmaker fell in its two biggest overseas markets ― China and the U.S. ― in May.

Shares of Hyundai Motor plunged 10.36 percent to 138,500 won ($124.8) on Tuesday, affected by lackluster sales at home and abroad. The stock hit a four-year low.

On Monday, Hyundai Motor said its domestic and overseas sales fell 8.2 percent and 6.1 percent last month, respectively, from the same period a year ago. The disappointing sales performance triggered a selling-spree by foreign investors the following day.

“Behind the dump of Hyundai Motor shares on Tuesday is a growing fear over the slump in overseas markets, a key drive for the firm’s revenue growth at a time when the carmaker continues to lose ground to foreign car brands in the local market at a fast pace,” a company insider said under the condition of anonymity.

“Most of all, the sales drop in cash-generating China last month seems to have shocked the market,” the official said. 

As of 2014, overseas markets account for 60 percent of Hyundai Motor’s overall sales, with China taking the largest share. The carmaker sold 1.12 million units in China last year, which took 23.2 percent of the firm’s total overseas car sales.

According to a report by Mirae Asset Securities, May car sales of Hyundai in China were estimated to drop 8 percent from a year ago due to growing competition from local and other foreign brands.

Car sales in the U.S., Hyundai’s second-biggest overseas market, dropped 10 percent last month from the same period last year, according to data by U.S.-based Autodata on Wednesday.

Affected by poor performance in the U.S., shares of Hyundai Motor hit a fresh 52-week low to 135,500 won on the same day.

In an effort to boost sales, Hyundai’s public relations team said the company had plans to launch new cars in the two key overseas markets.

The full-changed version of midsize SUV Hyundai Tucson will debut in China in the latter part of this year. Hyundai’s all-new Avante compact and Equus premium sedan will debut in the U.S. in the second half of the year.

The carmaker is also expected to launch a number of promotional programs to win back clients at home and abroad from foreign rivals.

Stock analysts, however, remained skeptical about the rebound of Hyundai Motor shares any time soon.

“It may take considerable time to see business conditions of Hyundai Motor improve at home and abroad,” Shinhan Investment & Securities analyst Choi Jong-hyuk said.

Regarding external conditions, the weakening yen is the biggest challenge for Hyundai Motor. The won-yen arbitrated rate closed at 893.42 won per 100 yen on Tuesday, well below the psychologically important level of 900.

The domestic market might not be a sure bet for the company, either. Heated competition from foreign automakers is chipping away at its long-held dominance here.

“We are feeling the pinch harder than in the 2008 financial crisis,” a Hyundai Motor official said.

The automaker’s top management has reportedly recognized the firm’s worsening business conditions, but is yet to formulate a roadmap to sail through the hardships.

By Seo Jee-yeon (jyseo@heraldcorp.com)