After surfing a successful wave of growing global sales, Korea’s Hyundai Motor Group is suffering some wobbles.
Lack of global capacity means that the Hyundai and Kia brands will not be able to continue the pace of sales growth while Kia today announced that its sales and operating profit were down last year.
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The company recorded sales of KRW47.2 trillion (US$44bn) and an operating profit of KRW3.5 trillion in 2012. Compared to 2011, sales grew 9.4% but OP jumped just 0.7%.
Unit sales continued to grow, up 9.3% to 2.7m globally, but Kia is only expecting to sell some 400,000 more this year. Operating profit was hit by labour strikes and following a 60,000 production disruption, halved in Q4 because of the volatility of exchange rates.
Profitability worsened partly because of recent inflated claims on fuel economy caused the company to earmark compensation costs of US187m to owners in North America.
Hyundai and Kia conceded last November that they overstated the fuel economy on more than 1m vehicles sold in the US and Canada, and agreed to compensate owners for the additional fuel costs.
Now owners at home in Korea may follow with a class action of their own for overstating the fuel consumption on 2012 and 2013 models.
According to sources, 48 people have filed their class-action suit at Seoul Central District Court seeking KRW500,000 (US$463) each in damages and another KRW500,000 in compensation per person.
