South Korea’s Hyundai Motor and affiliate Kia Motors turned in their lowest sales in seven years in 2019 as business in China slumped, missing their target for a fifth straight time, but forecast better numbers for 2020.

Weak 2019 sales underline the challenges Hyundai Motor Group has been facing, including a string of annual profit declines at Hyundai and higher costs to develop future technologies even as the global auto market stagnates.

“The market environment is very uncertain and internal and external challenges will intensify,” Group heir apparent Euisun Chung said on Thursday. But he reiterated that the Group would continue to focus on profitability and technology investment.

Hyundai and Kia reported a 3% drop in their combined global sales to 7.19 million vehicles for 2019, falling short of their target to sell 7.6 million vehicles.

Their sales have slumped in China, the world’s biggest auto market, offsetting a recovery in the United States where demand for their new sport utility vehicles and a favourable currency exchange rate have helped.

Hyundai and Kia, however, said they expect combined sales to rise 5% to 7.54 million vehicles this year, without giving any further details. That compares with a 0.4% growth in global market projected by its think tank and a 0.9% contraction forecast by Moody Investors Service.

But analysts caution it will be a daunting task for the car makers, together the world’s fifth-biggest by sales, to meet their target for this year.

“I think Hyundai Motor’s target may be too aggressive ... my guess is that it assumed a recovery in China, but that’s not easy,” said Kim Pyung-mo, analyst at DB Financial Investment.

Reuters