Hyundai gains as GM, Chrysler urged to restructure

Hyundai Motor Co., the fastest growing major carmaker in the U.S., and affiliate Kia Motors Corp. rose in Seoul on speculation they will win customers as General Motors Corp. and Chrysler LLC focus on restructuring.

Hyundai, South Korea's biggest automaker, jumped 4.7 percent to close at 55,500 won, the highest in almost five months, on the Korea Exchange. Kia, the country's second largest, advanced 6 percent to 8,530 won while the benchmark Kospi index rose 0.7 percent.

U.S. President Barack Obama yesterday gave GM and Chrysler deadlines to develop new strategies as the unprofitable U.S. automakers seek financial aid amid tumbling sales and the worst financial crisis since the Great Depression. By contrast, Hyundai has boosted U.S. sales 4.9 percent this year, and it may be able to extend this growth as GM and Chrysler focus on internal plans, said KB Investment & Securities Co.

"It's a mid-to-longer term opportunity for Hyundai-Kia," said Sohn Myung Woo, a Seoul-based KB Investment analyst. "Its small car lineup is resilient to recession and the weaker won is providing more room for Hyundai to give deeper incentives to win market share from U.S. makers." Sohn rates Hyundai "overweight."

U.S. Marketing

Hyundai's U.S. unit has spurred sales with an offer to take back vehicles from customers who lose their job and can't make payments. Unemployment in the U.S. in February rose to 8.1 percent, the highest in a quarter century.

The new marketing program will help spur sales for the Seoul-based automaker and the environment is definitely unfolding "favorable" for Hyundai against Japanese rivals, Sohn added.

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. have suffered from a 7.7 percent gain in Japanese yen in the past six months, which makes their exports more expensive in the U.S. That contributed to Toyota forecasting its first operating loss in 71 years. By contrast, the Korean won has dropped 14 percent over the past six months.

Obama gave GM, the biggest U.S. automaker, 60 days to develop a new strategy, and said Chrysler has 30 days to complete a partnership with Italy's Fiat SpA after rejecting initial plans submitted by the carmakers. The president also called upon company creditors, shareholders, workers, dealers and suppliers to make more sacrifices.