Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. have lowered their annual sales target for this year "internally" by around 10 percent in the face of less demand and intensifying competition that have resulted in a sharp fall in sales in major economies including China, sources close to the matter said Tuesday.

In its 2015 business plan unveiled earlier this year, the two South Korean car making giants aimed to sell a combined 8.2 million cars at home and abroad, which is 2.5 percent more than 8 million units for 2014, a target it barely achieved with last-month marketing and promotion efforts.

"Hyundai Motor and Kia Motors earlier drafted two emergency scenarios. One is to stick to the initial sales target and the other is to cut the target by 10 percent to the mid-7 million unit range," an informed source told Yonhap News Agency on condition of anonymity.

"It could have chosen the former one not to change the target, but it would mean around 2 trillion won extra cash to keep the sales promise through diverse promotion, marketing and incentives,"

he said. "The company has internally opted for the latter one that is to cut its sales target and the scaled-back target has been in place for months."

Hyundai Motor Group, which holds the two carmakers under its wing, has not failed to make it on its annual sales target since the early 2000s when its objective tended to be set way too high as part of self encouragement, company officials said.

Market observers and experts have expected the two carmakers to lower their sales target for this year, given their quite disappointing sales performance during the first six months of this year.

According to the latest company data, combined sales of the two automakers backtracked 2.4 percent on-year to 3.95 million units during the January-June period.

Hyundai Motor saw its overseas sales drop 3.2 percent in the six-month period from the year before, and the number for Kia Motors also shrank 3.1 percent.

The drop was mostly attributable to their setbacks in China, the world's No. 1 auto market. First half sales for Hyundai Motor and Kia Motors in the neighboring country both fell 7.7 percent and 2.4 percent on-year, respectively.

At home, combined Hyundai-Kia sales climbed 2.4 percent over the cited period, but the increase was due mainly to zooming sales of the smaller affiliate Kia Motors, whose figures jumped 10.9 percent on-year thanks to its strong lineups of sport utility vehicles, a segment that has continued to gain popularity here.

Hyundai Motor, in contrast, has not been faring well with its existing flagship sedan models in its home market, as cumulative sales in the first half of the year fell 3 percent from the previous year, corporate data showed.

Adding to this gloomy backdrop is Hyundai Motor Group's real estate splurge last year, which has only drawn flak from shareholders amid downbeat sales data.

Last September, Hyundai-Kia's parent group purchased a 79,345-square-meter piece of land in Gangnam, a posh southern district of Seoul, for an estimated 10.55 trillion won ($9.3 billion), close to three times its appraised value.

The auto conglomerate is expected to spend even more on its newly-purchased land, with plans to use an extra 49.1 trillion won to build a new headquarters and other facilities there over the next four years.

Hyundai Motor Group officials saw it is a matter of will to achieve the annual target, saying that the group can achieve it if it "puts a lot of" effort into incentives, marketing and promotion as done in the latter part of last year. And they claim that new cars waiting to be unveiled in the second half would turn the crank and lead to sales enough to make up for the first half shortfall.

Market experts, however, see it as "not plausible" since such efforts could translate into massive cash spending. Nor do they guarantee sales growth at a time when other rivals are also ramping up price cuts and other aggressive marketing tactics.

"They didn't do well too much in the first half," said Koh Tae-bong, a senior analyst at Hi Investment & Securities Co. when asked what he thinks about the auto giant's 8.2 million sales target.

Although Hyundai Motor is set to roll out new cars in the latter half of the year, industry watchers say the carmaker will not be able to turn things around anytime soon without any major upbeat performance in the China market, which takes up nearly a third of the auto conglomerate's 2015 sales goal. 

"If sales stumble in China, it's not possible to make up for the losses there in other markets ... the auto giant is likely to either (officially) revise down its sales target or cut down price to raise overall sales," he added. (Yonhap)