SEOUL (Bloomberg) -- Hyundai Motor Co. and affiliate Kia Motors Corp. forecast their weakest sales growth in eight years as competition intensifies and the stronger won hampers exports.
Hyundai and Kia's combined deliveries will increase 4 percent to 7.86 million vehicles in 2014, Chung Mong Koo, chairman of both automakers, told employees during a new year address in Seoul on Wednesday. That's the slowest growth since 2006 and falls short of the 8 million units projected based on the average estimate of five analysts surveyed by Bloomberg News.
Chung, 75, said the companies will invest in improving vehicle safety and technology as competition gets fiercer and the global economy reaches a "low growth era."
The forecast comes days after Hyundai announced a leadership change in the U.S., where sales have slumped as the won appreciated more than any major currency in the past six months, gaining 7.9 percent against the dollar and 13 percent versus the yen.
"The strong won against the yen that intensifies the competition with Japanese automakers remains a concern for Hyundai and Kia," Shin Chung Kwan, an analyst at KB Investment & Securities Co. said by phone. "Still, we expect Hyundai and Kia to exceed their sales targets this year and sell about 8 million vehicles combined."
Last week, Hyundai named David Zuchowski, formerly in charge of U.S. sales, to lead its U.S. unit after the automaker lost market share in the country -- the company's biggest market after China.
Separately, Hyundai and Kia agreed last week to spend as much as $395 million to settle lawsuits in the U.S. related to claims that they overstated the fuel-economy ratings of their vehicles.
In South Korea, Chief Technology Officer Kwon Moon Sik resigned along with two other executives in November after a record number of vehicles recalled last year.
In China, Hyundai's sales rose 24 percent to 931,330 units in the first 11 months of 2013, on course to exceed its annual target of 970,000 units. Kia beat its full-year target of 500,000 with a month to spare, selling 526,525 vehicles in the January-to-November period.
China is Hyundai's largest market and the second biggest for Kia, accounting for 22 percent and 19 percent, respectively, of total sales in the first nine months of last year, according to the companies.
The automakers sold 7.56 million vehicles in total in 2013, exceeding their goal of 7.41 million units, Chung said.
Hyundai and Kia's 2014 growth forecast is lower than the 6.2 percent increase posted last year. Korea Automotive Research Institute, an in-house research center in the Hyundai Motor Group, expects the global auto market to increase 4.1 percent this year.
Among new cars expected for this year, Hyundai will introduce the next-generation Sonata sedan and Kia will unveil the new Sorento SUV, according to Shin Chung Kwan, a Seoul-based analyst at KB Investment & Securities Co., who has a buy rating on Hyundai's stock.