Higher steel sheet and other raw material prices are big concern to car makers, which are also suffering from weak demand because of rising fuel prices and on concerns about the spreading fallout from the U.S. subprime mortgage crisis into job markets.
SEOUL (Reuters) - Top South Korean car maker Hyundai Motor Co <005380.KS> has no current plan to raise car prices, even though rising raw material prices are lifting production costs, its chief executive said on Friday.
Higher steel sheet and other raw material prices are big concern to car makers, which are also suffering from weak demand because of rising fuel prices and on concerns about the spreading fallout from the U.S. subprime mortgage crisis into job markets.
"Because of raw material prices we are spending about 500,000 won ($512.8) more producing a car," Kim Dong-jin, CEO and vice chairman of the automaker, told reporters ahead of a meeting with other business leaders and prime minister Han Seung-soo.
When asked if Hyundai could not help but raise car prices, Kim said: "No. That's not the case."
!ADVERTISEMENT!But the CEO confessed to difficulties in coping with cost increases, saying that cost-cutting efforts might not be enough to absorb material cost increases.
Hyundai is the world's sixth-largest auto maker by sales volume along with its affiliate Kia Motors Corp <000270.KS>.
Shares in Hyundai fell 3 percent to close at 78,200 won prior to the remarks, underperforming the flat KOSPI index <.KS11>. The stock is up almost 10 percent so far this year, easily outperforming the broader market's near-7 percent decline.
On Thursday, Hyundai Motor Chairman Chung Mong-koo said the company was worried over demand in the United States which has been falling due to higher fuel prices.
But despite signs of slowdown in the U.S. economy, Kim said the company was not planning to cut output in its U.S. plant in Alabama, adding that its U.S. sales in March were good.
Hyundai's U.S. sales in March rose 9.8 percent from a year ago, shrugging off a 12 percent slide in industry-wide sales, which is worrying many automakers.
An executive of Toyota Motor Corp <7203.T>, the world's most profitable and valuable car maker, said last month it was likely to miss its target for 5 percent growth in group-wide global sales for this year due to slowing sales in major markets and a firming yen.
In comparison, Hyundai Motor has set an ambitious target to boost this year's sales volume by a fifth to 3.11 million from 2.6 million sold in 2007.
Analysts say overseas units are vital for Hyundai's growth to shield it from frequent labor disputes at home and sharp movements in the won currency.
($1=975.1 Won)
(Reporting by Kim Yeon-hee and Cheon Jong-woo; Editing by Lincoln Feast)
