Both Hyundai and Kia rely on export products for a lot of their product sales. Consequently, the companies are highly vulnerable to changes in exchange rates. If the South Korean language currency, the won, increases relative to the U. S i9000. dollar, cars sold in america are recorded at a lower price once translated into won. This of course affects Hyundai's and Kia's revenue, and forces the two companies to sell more devices just to stay even.
Both equally Hyundai and Kia announced plans to expand production in the United States. Hyundai already provides a plant in Alabama, and Kia will eventually be beginning a grow in Atlanta. Both companies hope that having a U. S. developing site may help protect them against adverse forex movements. The U. S i9000. production spots allows the firms to shift creation during times of sustained currency motions. Since equally companies rely on the U. S. market for a substantive share of their profits, possessing a U. S. presence can be beneficial simply because they are nearer to an important market, and because U. S. customers might be more inclined to acquire cars created by Americans. Simultaneously though, developing in the United States where wages are higher could make it harder for the firms to implement their affordable strategies.
If Hyundai expects the gained to appreciate, Hyundai should consider growth in the United States. A stronger earned implies a weaker dollars, which in turn signifies that U. S. consumers would need more dollars to buy a Hyundai released from Southern region Korea that could mean a drop in sales. Additionally, a better won ensures that cars which can be exported by South Korea will be noted at a reduced value the moment translated by dollars back in won. Hyundai experienced this kind of very situation in 2006 if the won struck a 10 season high resistant to the doll
The rise in Hyundai's and Kia's sales during early 2009 can be related to a combination of Hyundai's and Kia's low cost strategies and the fact that the won tumbled twenty eight percent...