Hyundai sees softer U.S. market ahead

By Soyoung Kim

DETROIT (Reuters) - Hyundai Motor Co (005380.KS: Quote, Profile, Research, Stock Buzz) expects industry-wide U.S. auto sales to decline further in the fourth quarter as financial market turmoil adds to consumer uncertainty, its U.S. sales chief said on Tuesday.

David Zuchowski, vice president of Hyundai Motor's North American sales, said U.S. auto sales were tracking below 10 million units on an annualized basis for the first 10 days of September, and could end the month as low as 12 million units.

That compares to an annualized sales rate of 13.7 million units in August and 16.15 million in 2007.

"We believe the industry will soften over the last quarter," Zuchowski said at the Reuters Autos Summit in Detroit. "It's a bit of a perfect storm."

Hyundai's outlook represents one of the most cautious views among major automakers on the near-term prospects for world's largest vehicle market.

U.S. auto sales have dropped about 11 percent through the end of August, slumping to 15-year lows in response to record gasoline prices, tighter credit and a housing market slump that has undercut consumer confidence.

But some automakers, including General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), have expressed guarded optimism that industry-wide sales might have hit bottom this summer, after August showed the first rise in sales over the previous month this year.

Zuchowski said he expected the U.S. market would remain almost flat at 14 million units next year after sales of 13.9 million units this year.

While Hyundai will miss its target of selling 500,000 vehicles this year, the South Korean automaker could still buck the industry downturn to post a sales increase because of its focus on smaller, fuel-efficient cars, he said.

Hyundai sold 312,899 vehicles in the first eight months of the year in the U.S. market, down 4 percent from last year.

SMALLER CARS, HYBRIDS

Hyundai builds the Sonata mid-size sedan and the Santa Fe SUV at an Alabama plant, but imports all of its compacts and smaller cars from South Korea.

Because of a series of strikes over the summer at a major plant in Ulsan, South Korea, the automaker is facing a supply shortage of smaller cars such as the Elentra sedan that is likely to last until November, Zuchowski said.

"We're going to be short small cars for the immediate 90 days," he said.

Zuchowski said a new plant set to open in November in the Czech Republic would supply Elantra sedans for the European market. Production from that European plant will also free up about 100,000 units produced at Ulsan to be exported to other markets. Most will be exported to the U.S market, he said.  Continued...