Hyundai sales hit record high in Germany, but worries linger

By Park Jin-hai

Hyundai Motor’s sales hit a record-high in Germany last year, according to data from the German Association of the Automotive Industry, Friday.

Hyundai Motor sold 108,434 cars in Germany last year, an 8.6 percent rise on the previous year, exceeding the previous record of 101,522 set in 2013. The growth is the highest among brands that sold more than 100,000 units last year, the data showed.

Hyundai Motor's 2015 growth outperformed the overall German auto industry, which grew 5.6 percent from a year earlier to 3.21 million. Its market share also inched up to 3.4 percent in 2015 from 3.3 percent in 2014.

Combined with Kia Motors' record-high sales of 55,689 last year, Hyundai Motor Group became the second-biggest foreign brand, following Skoda.

Hyundai also fared well in the U.S. market. It reported record-high sales of 761,710 vehicles, up 5 percent last year.

But analysts warn that the increase in sales in advanced automotive markets may not help the company’s bottom line as much, because the increase has been made in exchange for greater incentives.

“Due to the slump in the developing countries including China, Hyundai has been focusing on exporting cars to advanced markets,” said Kim Joon-sung, an analyst at Merits Securities. “To meet the export target, it has been providing greater incentives, which in turn raises its marketing costs and erodes profits.”

Hyundai, mentioning China’s slowing automotive market and unstable markets in developing countries, has announced a global sales target of 8.13 million for Hyundai and Kia cars, down from the previous target of 8.2 million.

Its China sales last year posted a 7 percent decrease at 1.03 million, while Russia had a 10.3 percent fall and Brazil a 5.7 percent dip.

Jeon Jae-cheon, an analyst at Daishin Securities, said Hyundai’s first-quarter performance has been forecast to be below the market consensus. “In the first quarter, it is likely the carmaker will see a sales drop in the U.S. market,” he said.

“In order to clear the inventory it accumulated to the end of the year in the U.S., it is likely to increase the incentives in the first quarter.”

Hyundai’s inventory last year built up in U.S. and European markets from the third quarter. Its incentive in the U.S market was lowered by 19 percent in the fourth quarter from the previous quarter, after the upward trend last year, but is likely to rise gain in the first quarter, according to Jeon.

He predicted that Hyundai’s sales will increase only 1.1 percent this year.