A growth of 12.1 per cent in the global sale of cars of South Korea’s Hyundai Motor Co and affiliate Kia Corp would be registered by the companies in the current year, the two companies said in a statement on Monday.

The companies however said that a global shortage of semiconductor chips used in cars resulted in the total combined sale of the companies last year that was lower than the target that had been set by the companies. 

During the entire of 2021, the two firms sold a total of 6.67 million vehicles which was about 3.7 per cent lower than the target of sale for 6.92 million vehicles of the two companies combined. The companies said that this performance was primarily because of issues in their supply chain including a shortage of semiconductor chips. These caused a drop in deliveries and shipment of their vehicles. 

For 2021, the two companies have set a combined target of selling 7.47 million vehicles, they said,

“In 2022, Hyundai Motor plans to expand its market share and strengthen profitability through efforts to stabilise chip supply and demand, adjust vehicle production schedules, strengthen electric vehicle lineups as well as optimising sales profit and loss by region,” Hyundai Motor said in a statement.

The global shortage in semiconductors used in vehicles is because of supply problems as well as a sudden and huge surge in demand for chips used in consumer electric gadgets during the Covid-19 pandemic. Auto companies all around the world have been hit hard because of the supply chain issues, chip shortages as well as shortage of critical parts of vehicles with companies being forced to temporarily shut down manufacturing units resulting in a production loss of millions of vehicles globally. 

According to analysts, the target set by Hyundai and Kia for 2021 was reasonable.

Demand for the vehicles of the two companies is expected to remain strong in 2022, primarily because of pent-up demand from consumers who had been unable to purchase vehicles in 2021 because of supply shortages, said Lee Jae-il, an analyst at Eugene Investment & Securities.

“It appears that the chip shortage has been showing some signs of easing … however, rising raw material prices would likely have (an) impact on their profitability,” Lee added.

There was a slight, 0.7 per cent rise in the stocks of Hyundai Motor compared to 0.4 per cent in the wider benchmark market KOSPI. Its sales target globally was reduced by 4 per cent to 4 million vehicles in 2021 was cut by Hyundai Motors in October, from 4.16 million vehicles.

(Adapted from Europe.AutomotiveNews.com)