SEOUL – Hyundai Motor Co <005380.KS> shares fell more than 5 percent on Thursday ahead of the release of its October auto sales figures with analysts citing market rumors that the South Korean automaker may announce a recall in the United States or face fuel-economy related lawsuits.
Two Hyundai Motor executives told Reuters that they have not heard about possible recalls or lawsuits.
"As far as I know, October sales went well," one of the two executives told Reuters on condition of anonymity because he is not authorized to speak to the media.
Shares of South Korea's biggest carmaker have been under pressure since late September mainly due to concerns that a strengthening won and tight supply of its cars may slow earnings growth in the coming years.
"Today's share drop appears to be the result of unsubstantiated rumors making rounds in the market that Hyundai is set to encounter some trouble in the U.S. market," said Ahn Se-hwan, an auto sector analyst at IBK Securities. "From what we've been able to ascertain, Hyundai's October sales are comparatively solid," he said.
Shin Jung-kwan at KB Securities also said there was market talk that a U.S. National Highway Traffic Safety Administration quality investigation into Hyundai is underway, but stressed that this happens fairly regularly.
A Hyundai spokesman said it was investigating the rumors and did not have any immediate comment.
The company earlier faced probes in the United States over steering problems with its Santa Fe sport utility vehicle and shattering window issues for its Veloster utility coupe.
Hyundai Motor was also sued for allegedly misleading consumers sensitive to high gas prices that its popular 2011 and 2012 Elantra model is more fuel efficient than it actually is.
By 0343 GMT, shares of Hyundai slid 5.12 percent after falling as much as 5.6 percent, its lowest intraday level in one week. Shares of its affiliate, Kia Motors <000270.KS>, dropped 3.14 percent. The wider market <.KS11> was down 0.78 percent.
Hyundai shares have lost momentum in recent months, down 15 percent since late September, amid concerns about slowing earnings growth.
Hyundai, along with Kia, is the world's fifth-biggest carmaker and the group has outperformed in an industry battered by Europe's debt crisis with investors concerned about a go-slow strategy on expanding capacity.
Hyundai has not announced plans for a new plant for at least two years as it focuses on building its brand and quality issues rather than aggressively chasing market share. This has left it short of cars to sell into a recovering U.S. market where Japanese rivals have muscled back in, as well as in emerging markets.
(Reporting by Joyce Lee; Additional reporting by Hyunjoo Jin and Somang Yang; Editing by Matt Driskill)