Hyundai Motor sees China slowdown, Nissan to bounce back

Thu Jul 25, 2013 7:10am EDT
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By Hyunjoo Jin and Yoko Kubota

SEOUL/YOKOHAMA, Japan (Reuters) - Hyundai Motor Co (005380.KS: Quote) expects its strong sales growth in China to moderate in the second half of the year, hit by an economic slowdown, tight output capacity and its failure to produce new models.

Hyundai Motor, which combined with its affiliate Kia Motors Corp (000270.KS: Quote) is the world's fifth-biggest automaker, on Thursday posted a forecast-beating profit. Analysts now expect a slowing Chinese economy to take a toll on its stellar growth.

"The Chinese market will slow down in the second half because of the weaker-than-expected Chinese economy. Hyundai's growth will moderate too, because of the high base of last year," said Kim Dong-ha, an analyst at Kyobo Securities.

He expected Hyundai's second-half sales to grow 7 percent in China - the world's biggest auto market - after the automaker posted a 36 percent surge in first-half car sales.

Nissan Motor Co (7201.T: Quote), which reported a 14 percent rise in quarterly net profit on Thursday, expressed confidence it was on track for a rebound in its key Chinese market, where it saw sales plunge since last September following a diplomatic row.

China's economy has slowed in nine of the past 10 quarters, compounded by a survey this week that showed the country's manufacturing engine lost further momentum in July and the job market weakened.

A Reuters poll taken July 16-17 showed economists have slashed growth forecasts yet again and now expect China to slip further in the second half.

"China's car market made an explosive growth of 16 percent in the first half, as local governments expanded car subsidies, and automakers beefed up promotions," Hyundai Motor's Chief Financial Officer Lee Won-hee told a conference call.   Continued...

A visitor walks past a Hyundai Motor logo at a Hyundai dealership in Seoul April 25, 2013. REUTERS/Kim Hong-Ji