SEOUL---South Korea's leading automaker Hyundai Motor Co., seeking to become one of top five global automakers by 2010 teamed up with its affiliate of Kia Motors Corp, is targeting to increase its total sales by 13.9 percent from last year to 2.389 million vehicles in 2005.

Hyundai Motor thinks the growth will be possible with the introduction of two new models in 2005—the XG and Santa Fe replacements—, and the long-awaited introduction in the local Korean domestic market of environment-friendly diesel passenger cars.

Hyundai Motor, which controls about 75 percent of South Korea's auto market along with the second-largest Kia Motors Corp., hopes to increase its domestic sales by 9.8 percent this year to 605,000 units while it tries to boost its main growth engine of exports by 15.3 percent to 1,784,000 units.

"Although we will see many difficulties this year such as weak domestic demand, global economic slowdown, and unstable foreign exchange rates, we will continue our growth momentum and focus on quality and innovation," Hyundai-Kia Motors Chairman Chung Mong-Koo said in its New Year's speech to Hyundai and Kia Motors workers.

The 68-year-old Chung, who has achieved the remarkable improvement of the Hyundai brand in J.D. Power's Initial Quality Study last year, said Hyundai Motor will use its Alabama plant in the U.S., which starts production of Santa Fe and Sonata in March or May this year, as a major spring board to become a top five global carmaker.

During the speech, Chung reminded employees of the need to embrace innovation and change in order to transform Hyundai into the world's best automaker.

"Innovation for Humanity is realized by a devotion to customer satisfaction, global automotive excellence and the willingness to innovate and overcome challenges," Chung said.

Hyundai said most of its growth would come from overseas sales which are forecast to grow at nearly twice the pace of domestic sales.

As an investment in the future, Hyundai will allocate 1.96 trillion won (US$1.86 billion), up 34.2 percent from last year, for research and development. The combined R&D investment for Hyundai Motor and affiliates will rise 19.4 percent year-on-year to 3.2 trillion won (US$3.04 billion).

For facility/capital investments alone, Hyundai Motor has earmarked 820 billion won (US$780 million) for 2005. Total investments for the Hyundai-Kia Automotive Group are set at 6.76 trillion won (US$6.43 billion), an increase of 23.8 percent year-on-year.

Chung said Hyundai will step up innovation to improve quality to achieve its ambition of becoming a top global automaker,

Kia Motors' also unveiled a strong sales target for 2005 of 1.34 million units, which is up 23.8 percent from provisional sales of 1.08 million units last year. Kia Motors expects its exports to rise to 1.03 million units, up 24.5 percent from last year's 827,000 units.

While Hyundai Motor is focusing on the U.S. market as it tries to open the Alabama plant in Montgomery, Alabama in March this year, Kia Motors is more focused on the European market as seen in its construction of a plant in Slovakia, which will be completed in late 2006.

In December, Hyundai Motor's sale reached 230,437 vehicles. Exports rose 26.5 percent to 179,364 vehicles, while domestic sales remained weak, only rising 4.6 percent to 51,073 units.

Kia Motors' total sales also rose 37 percent last month from a year earlier to 123,321 units. Sales at home fell 11 percent to 19,572 units, while exports rose 53 percent to a record monthly high of 103,749 vehicles.

As a result, Kia Motors' exports last year reached 861,055 vehicles, up 42 percent from a year ago.

Kia ended the year with annual sales figures up 70% in Europe, 27% in North America and 21% in China.

Senior Executive Vice President and COO, Yong-Hwan Kim said: "This past year was full of many significant events for us at Kia Motors. We broke ground on our first European plant in Slovakia, released three successful models, and have firmly established ourselves as the fastest growing car maker in the world.

"Our latest export and sales figures are further evidence of this growth. In 2005, Kia Motors will maintain its strong rate of growth, and will continue to design and produce cars of the highest quality that satisfy the sophisticated tastes of our expanding customer base," said Mr. Kim.

In 2004, Kia Motors launched three new models -- the A-class Picanto, C-class 4- and 5-door Cerato (Spectra) and the Sportage compact SUV.

Supporting the new additions to its rapidly growing vehicle line-up, which increasingly feature European styling and improved quality and safety facilities, Kia Motors embarked on several new initiatives in 2004 aimed at further boosting its presence in overseas markets.

In a related development, meanwhile, Hyundai and Kia Motors said announced a combined donation of USD 1.5 million for the countries affected by the recent tsunami that hit the Asia Pacific countries including India, Indonesia, Malaysia, Thailand, and Sri Lanka.
In addition, Hyundai-Kia will also provide USD 370,000 worth of free vehicle repairs and free parts supply to the affected nations. Also, 5,000 local Hyundai-Kia employees and dealers have joined in the relief effort.

In 2004, the total sales -- including local sales and exports -- of South Korea's five automakers including GM Daewoo, Ssangyong, and Renault Samsung, rose 21.1 percent to 4.51 million units, largely thanks to a jump of 41.7 percent in exports of 3.43 million units.

Industry experts say local automakers should deal with a string of negative factors this year, such as flat local sales to higher steel prices, a stronger Korean currency won against the U.S. dollar and high oil prices.

Third-largest automaker, GM Daewoo, meanwhile, said it sold 91,468 vehicles in December, up 32 percent from a year earlier, thanks to the strong sales of mid-sized Lacetti, Matiz and Kalos mini cars.

GM Daewoo was established in October 2002 when General Motors took a controlling stake. GM Daewoo hopes to raise its production and sales 10 percent this year to more than 1 million units by selling more sedans in its main overseas market of Europe under the Chevrolet badge.

Ssangyong Motor Co. sold 11,170 of its Rexton, Korando and other SUVs in December, 21 percent down from a year earlier. Exports more than tripled to 4,800 vehicles from 1,363 a year ago. But, domestic sales fell 45 percent to 6,370 units.

In late October last year, Shanghai Automotive Industry Corp, China's fourth-largest automaker, bought Ssangyong Motor for about $500 million. Ssangyong, which has the capacity to make 200,000 vehicles a year, currently offers the Rexton, Korando and Musso SUVs and the luxury sedan, Chairman.

Shanghai Automotive is the joint-venture partner of GM and Volkswagen AG.

Renault Samsung Motors, South Korea's fifth largest automaker, saw its December sales, mostly local sales, surge 55.1 percent to 10,646 units, thanks to the launch of long-awaited SM7 big sedan on Dec. 1.

Domestic sales rose more than 62 percent from November to 10,433 units in December, while exports nearly halved to 213 units, said Renault Samsung, which is controlled by France's Renault SA.

In 2004, Renault Samsung sold a total of 85,098 units, down 23.6 percent from a year ago.

By Peter Chang
Seoul Reporter