Hyundai And Kia

1053 Words5 Pages
Hyundai and Kia 1. Explain how the rise in the value of the Korean currency the won, against the dollar impacts upon the competitiveness of Hyundai and Kia exports to the United States? The rise in value of the Korean again the dollar will cause the cost of the import to increase. A strong won means that Hyundai and Kia vehicles sold in the United States for dollars are recorded at a lower value when translated back into the won. This will hurt the financial performance of both companies. One of the attractive features of the Hyundai cars was affordability. However if Hyundai’s won continues to appreciate it may force them to abandon their low cost strategy and start to raise prices. In order to counter this trend, Hyundai open automobile plants in the U.S. Hyundai relies on overseas shipments for around 75 percent of its sales. An article dated, September 21, 2011 stated that exporters in South Korea are delighted with won’s depreciation. “An official at Hyundai Motor stated that the automaker has strengthened its competitiveness by reducing cost burdens and expanding it production sites into overseas rather than depending on the won’s depreciation.” 2. Hyundai and Kia are both expanding their presence in the United States. How does this hedge against adverse currency movements? What other reasons might these companies have for investing in the United States? What are the drawbacks of such a strategy? Hyundai and Kia’s senior management made a good decision to open up manufacturing plants in the United States. Hyundai and Kia has set a goal to increase their market share and to protect themselves from adverse currency movement. They did so by sending a sustainable amount of their production to United States will help them decrease the money lost by the won increase in value against the U.S. dollar. Hyundai and Kia understand that the U.S.
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