Hyundai Motor targets 20 pct rise in 2008 car sales

SEOUL (Reuters) -- South Korea's top auto maker, Hyundai Motor Co., aims to increase car sales by a fifth this year to 3.11 million vehicles, but the ambitious growth target in fiercely competitive markets failed to impress investors, who marked Hyundai shares down more than 4 percent.

Increased spending by South Koreans is expected to bolster future profits at Hyundai, which controls about half the high-margin domestic market, but the credit crunch will squeeze demand in the United States, while tough competition in China will pressure margins.

Hyundai last month denied media reports it was considering cutting production at its U.S. plant.

“Hyundai's 2008 sales target looks very aggressive,” said Kim Byung-kuk, an analyst at Daishin Securities. “Most brokers think it will be difficult for Hyundai to sell over 3 million units this year.”

An economist with the U.S. National Automobile Dealers Association has said U.S. vehicle sales could drop to 15.5 million in 2008 from last year's 16 million.

Toyota Motor Corp. said last month it expected to increase sales by 5 percent this year to a record 9.85 million vehicles, cementing its position as world leader ahead of General Motors Corp.

South Korea's Commerce Ministry on Wednesday forecast growth in auto exports would probably slow this year to 5.7 percent from a provisional 13.3 percent in 2007, citing a weak U.S. economy, South Korea's second-biggest export market behind China.

“There are big concerns about the U.S. car market this year, because of mounting sub-prime mortgage troubles,” said Kim.

“Hyundai stands a chance of faring better than Detroit's Big Three if its strategy to focus on fuel efficiency amid rising gasoline prices proves successful.”

Hyundai and affiliate Kia Motors Corp., together the world's No. 6 carmaker, increased their U.S. sales by 2.5 percent in January-November to 701,927 units, giving them a 4.8 percent market share.

New models

Hyundai also said in a filing with the Korea Exchange that it set its 2008 revenue target at 46 trillion won ($49.2 billion), up 12 percent from last year.

Hyundai spokesman Jake Jang said the 2008 targets would be achieved through increased output at overseas plants and the introduction of new models.

In November, Hyundai said it aimed to almost double sales in China and increase U.S. sales by 10 percent. Toyota expects its U.S. sales to grow 3 percent this year, in line with growth forecast by Japanese rival Honda Motor Co. Hyundai, maker of the Sonata sedan and Santa Fe sport utility vehicle, said its December sales dipped 2 percent to 224,102 units. Its total 2007 sales rose 4 percent to 2.6 million units.

The company has factories in the United States, China, India and Turkey, and is adding a plant in the Czech Republic.

Its China capacity is set to double to 600,000 units a year with a new $1 billion plant on the outskirts of Beijing. Mass production there is set to start in May.

Kia, South Korea's No. 2 automaker, said it aimed to increase sales by 24 percent this year to 1.7 million vehicles, and was targeting 2008 revenue of 23 trillion won, up 21 percent.

Hyundai shares ended down 4.3 percent at 68,500 won and Kia fell 1.4 percent to 9,960 won on a broader market that shed 2.3 percent.

Hyundai shares rose 6.2 percent last year, underperforming the wider market's 32 percent gain. Kia dropped 25 percent.