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Hyundai, Kia Will Cut Costs as Sales, Profits Decline

11 Juin 2015 - Automotive News

Hyundai, Kia Will Cut Costs as Sales, Profits Decline

Hyundai Motor and its affiliate Kia Motors Corp. are reducing costs after sales and profit fell at the two Korean carmakers.

Hyundai and Kia are "making efforts to cut costs" after first-quarter operating profit declined, the carmakers said in a joint email today. They didn't provide specifics on the cuts, or any estimate.

Operating profit at both Hyundai and Kia declined for a fourth consecutive quarter in the three months ended March 31. The Seoul-based automakers have posted declining vehicle sales as unfavorable currency-exchange rates undermine their ability to compete against the likes of Japan's Toyota Motor Corp.

"The first thing they can cut would probably be costs related to sales, marketing and advertisement," said Shin Chung Kwan, an analyst at KB Investment & Securities Co. "The current situation, and their efforts to cut costs, will also give them the power to have a say when negotiating terms for other costs that can be incurred, such as auto-part prices and workers' wages."

The JoongAng Ilbo newspaper reported earlier that Hyundai Motor Group is seeking to cut costs by 30 percent, citing an unidentified senior executive.

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