Asian automakers kick off 2011 on firm note

Friday, 4 February 2011 00:09 - - {{hitsCtrl.values.hits}}

SEOUL/TOKYO (Reuters): Asian automakers, led by outperformer Hyundai Motor, got off to a strong start for 2011 with robust January sales as they gear up for the sector's broad recovery.

But growth in China and India is seen cooling off, while an uneven recovery in advanced markets such as the United States and Europe remain a concern, analysts say. “Hyundai posted firm sales despite concerns that its China sales would fall sharply because of the end of tax subsidies... Now the focus is its U.S. sales figures, which will be released overnight,” said Yoon Phil-joong, a Samsung Securities analyst.

“U.S. cars sales are expected to fall from December because of heavy snow and year-end inventory clearance. But the U.S. market should gradually recover this year, albeit not drastically,” Yoon said. U.S. auto sales lost momentum in the final weeks of January, auto executives and a leading analyst cautioned on Monday, setting the stage for a softer start to 2011 than the industry had expected. Automakers in the United States are set to report January sales later on Tuesday. Hyundai and its affiliate Kia Motors, which outperformed their overseas rivals during the economic downturn, are set to report strong sales and earnings this year, driven by improved brand image and quality and new models, analysts said.

Hyundai saw its global sales jump 14 percent in January, fueled by robust sales of the Sonata sedan and the Elantra compact, while Kia sales rose by a third.

New auto sales in Japan, excluding 660cc minivehicles, fell 21.5 percent in January, declining for the fifth straight month after subsidies to replace older cars expired. But the pace of decline slowed from the previous two months and an industry official termed the drop as relatively tame, noting that sales volume in January represented a 7.4 percent rise from the same month two years ago.

“In December, sales posted a big drop so we were a bit worried, but the decline was limited to 21.5 percent,” said Michiro Saito, general manager at the Japan Automobile Dealers Association, noting that new and refreshed models such as Toyota Motor Corp's Vitz subcompact and Nissan Motor Co's Serena minivan may have helped.

Saito, however, said it was too early to conclude that Japanese automobile sales had hit a bottom. “For that, we will have to see a recovery in the real economy,” he said. Maruti Suzuki , India's top carmaker, posted a 14.7 percent rise in January car sales -- its slowest pace of monthly growth since March as rising interest rate and higher fuel costs crimp demand for automobiles in Asia's third-largest economy.

Tata Motors, which makes both commercial vehicles and cars, including the ultra-cheap Nano, reported a 15 percent rise in January sales. Utility-vehicles maker Mahindra & Mahindra said sales rose 22 percent last month from a year ago.

Auto sales in India grew a record 31 percent in 2010, driven by a burgeoning middle class, but hike in interest rates, and rising fuel and vehicles costs are expected to slow sales growth this year.