SEOUL—Kia Motors Corp. said Friday it expects sales growth to decelerate this year due to tougher competition overseas and weak domestic sales after it posted a 3.5 percent decline in fourth-quarter net profit.

The South Korea auto maker, in which Hyundai Motor Co. owns a nearly 40 percent stake, expects overall sales for 2012 to grow 9.5 percent to 2.71 million units, slowing from a 19 percent rise to 2.48 million units last year, reported The Wall Street Journal.

In overseas markets, where Kia sells eight out of 10 cars, Kia expects stiffer competition from rivals General Motors Co., Toyota Motor Corp. and Honda Motor Co., a company official said.

On the home front, demand is likely to remain weak, with more local customers increasingly showing a preference for imported cars due to lower prices, the official added. Kia continues to face headwinds in the domestic market, as sales are forecast to increase at a sluggish 1.7 percent pace to 500,000 units this year. In the fourth quarter, Kia said sales in South Korea fell 5.5 percent to 125,120 units.

Despite the lower sales forecast, Kia has set bold targets for its key U.S. and European markets, where Kia has increased its market share in recent years. Kia is aiming for 10 percent growth in sales to 534,000 units in the U.S. and a 23 percent increase to 356,000 units in European markets.

Kia reported consolidated net profit for the three months ended Dec. 31 fell 3.5 percent to 790.35 billion won ($702 million). Operating profit rose 17 percent to 825.79 billion won during the quarter, while sales were up 8.7 percent to 10.963 trillion won.

For 2011, net profit rose 30 percent to 3.519 trillion won while sales gained 21 percent to 43.191 trillion won.

At a conference call, Chief Financial Officer Lee Jae-rok said Kia plans to launch the K9 large-size sedan in the domestic market in the second quarter, adding the model will help raise the company’s average selling prices. The company is targeting to sell over 2,000 units of the flagship sedan per month, Mr. Lee said.

For 2011, the average selling price for exported vehicles increased 11 percent to $13,100 per unit, while that for domestic vehicles inched up 1.8 percent to 18.6 million won.

Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. fell in Seoul trading after South Korea’s two biggest automakers reported fourth-quarter profits that missed analysts’ estimates.

Hyundai fell for a second day, slipping as much as 3.7 percent to 220,500 won at 10:44 a.m. on the Korea Exchange, while Kia dropped as much as 2.9 percent. Seoul-based Hyundai, maker of the Elantra sedan, yesterday reported net income that was about 10 percent below the average analyst estimate compiled by Bloomberg, while Optima-maker Kia today delivered profit that was 27 percent lower than the average estimate.

The share declines signal investors are betting that Hyundai and Kia, the two best performers on the Bloomberg World Auto Manufacturers Index in 2011, will fail to replicate their success this year as Toyota Motor Corp. and Honda Motor Co. recover from natural disasters in Japan and Thailand. This week, Honda President forecast Takanobu Ito forecast earnings will climb to the highest in at least five years and Toyota raised its sales forecast.

“There’s an underlying concern that Hyundai and Kia may not perform as well as they did last year,” said Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co., which manages the equivalent of $3.6 billion in assets, including Hyundai and Kia shares. “This uncertainty will continue throughout the year, and each misstep will trigger the concern.”

Hyundai’s full-year net income rose 35 percent to 8.1 trillion won ($7.2 billion), more than the combined estimated earnings at Toyota and Nissan Motor Co. Still, the quarterly results missed estimates because of unexpected bonus payments at financial affiliate Hyundai Capital, Gregory Kim, an analyst at Mirae Asset Securities Co. in Seoul, said yesterday.

Kia, the maker of the Optima sedan and Rio compact, today delivered fourth-quarter net income, operating profit and revenue that missed average analyst estimates compiled by Bloomberg.

Toyota Motor Corp.’s December sales gain beat analysts’ estimates and Kia Motors Corp. had the biggest increase among Asia-based brands, capping the U.S. auto industry’s best year since 2008.

Sales rose 0.4 percent from a year earlier for Toyota, compared with the average 1 percent drop of five estimates compiled by Bloomberg. Deliveries increased 43 percent for Kia, 13 percent for affiliate Hyundai Motor Co. and 7.7 percent for Nissan Motor Co., according to statements yesterday. Honda Motor Co. reported a 19 percent drop, citing tight inventory.

Industrywide sales gained an estimated 8.7 percent as consumer confidence reached an eight-month high in December, and carmakers aired holiday ads and continued promotions begun in November. Kia’s December surge in the U.S. gave the Seoul-based company a 36 percent full-year increase, the largest for a major automaker.

“Kia has even more potential this year,” said Rebecca Lindland, a Norwalk, Connecticut-based analyst for IHS Automotive. “Our forecast is for them to be up 23 percent. Hyundai will be up by double digits again in 2012, but right now everything new from Kia is selling really well.”

SEOUL – Kia has no plans to build new plants and will focus instead on product quality, despite concerns its limited production capacity may slow sales growth, said the automaker’s co-CEO, Lee Sam-ung.

“Quantitative growth is important, but qualitative growth is also important. We plan to focus on improving product quality and our brand,” he said at a launch event for Kia’s revamped Rio subcompact, according to Automotive News Europe.

“Global auto demand is expected to deteriorate, but we will launch new models, strengthen local promotions and enhance brand competitiveness to cope,” Lee said on Wednesday.

Kia will “try its utmost” to achieve its 2011 sales target of 2.5 million vehicles despite a troubled global economy, Lee said, adding that it had not yet fixed next year’s sales goal.

Kia and affiliate Hyundai Motors , are expected to continue to post strong sales this year despite the uncertain economic outlook, but their stretched production capacity has failed to keep up with demand.

A Hyundai executive told Reuters early this month that it also had no plans for new plants.

Lee denied media reports that Hyundai-Kia did not plan to produce pure electric vehicles and would focus on hybrid electric vehicles, saying the group plans to launch all-electric compact cars in 2014 and 2015, respectively.

Kia aims to sell 260,000 of its new Rio subcompact next year globally, up from 110,000 this year, to expand its presence in the small-car segment. The Rio was Kia’s No.3 vehicle in terms of sales last year with global sales reaching 224,942 units.

SEOUL – Kia will introduce a third shift at its Zilina, Slovakia, plant in the first quarter of next year and hire 1,000 new employees to expand output.

The move comes as Kia and affiliate Hyundai seek to aggressively boost sales in Europe. Kia plans to launch a successor to its Cee’d model, its top-selling vehicle in Europe, next year, according to Automotive News Europe.

Kia builds the Cee’d, Sportage, Venga models in Zilina.

“The creation of the third shift at Zilina is the latest step in Kia’s long-term process of building cars locally to best meet local consumers’ needs and tastes,” said Paul Philpott, Kia Europe’s chief operating officer, in a statement.

He added: “Strong demand for all our models and especially our new Sportage compact SUV means we need to significantly increase production at our Slovakia facility.”

Kia said the 1 billion euro investment is also expected that several thousand new jobs at component suppliers in Slovakia.

Kia’s sales increased 4.2 percent to nearly 180,000 in EU and EFTA countries in the first eight months, giving the brand a 2 percent market share, according to industry association ACEA.

Hyundai Motor Co. and Kia Motors Corp., South Korea’s largest automakers, outpaced the industry in July U.S. sales while Honda Motor Co. and Toyota Motor Corp. led declines for Asian brands amid inventory constraints.

Sales rose 10 percent from a year earlier for Hyundai and 28 percent for Kia, the companies said yesterday. Deliveries fell 28 percent for Honda and 23 percent for Toyota, the largest Asia-based automaker. Nissan Motor Co. reported a gain of 2.7 percent, reported Bloomberg.

“The earthquake that hurt the Japanese created an opening for Hyundai and Kia to get more attention, and they’re taking advantage of it,” said Jessica Caldwell, an analyst for Edmunds.com, a Santa Monica, California-based auto pricing and data service. “Toyota and Honda both still have inventory issues, but the problem seems worse for Honda.”

While inventories for Japan-based carmakers are rising since the nation’s March 11 quake and tsunami disrupted production of models such as Toyota’s Prius and Honda’s Civic, neither company expects to be fully restocked this year. A slump in U.S. hiring is also leading consumers to retrench.

Hyundai Motor shares fell 4.5 percent to 214,000 won in Seoul, while Kia dropped 2.6 percent to 75,700 won.

Consumer spending in the U.S. unexpectedly dropped in June for the first time in almost two years, the Commerce Department reported yesterday. Incomes grew at the slowest pace since November and the savings rate was the highest since September.

“We’re seeing consumers not have the confidence to spend,” Rebecca Lindland, an IHS Automotive analyst based in Lexington, Massachusetts, told Bloomberg Television.

Industrywide sales of new cars and light trucks totaled 1.06 million in July, a 0.9 percent rise from a year earlier, according to Woodcliff Lake, New Jersey-based Autodata Corp.

The declines for Toyota and Honda cut sales for Asia- based carmakers by 10.3 percent, while U.S.-based brands increased 9.9 percent. Sales rose 7.6 percent for General Motors Co., 5.9 percent for Ford Motor Co. and 20 percent for Chrysler Group LLC, which is majority owned by Fiat SpA.

“The economy has clearly lost some momentum,” Don Johnson, GM’s vice president of U.S. sales, said on a conference call yesterday. “We do believe that it will continue to recover, but more gradually than we originally anticipated as we move through the second half of the year.”

Congressional debate over raising the $14.3 trillion U.S. debt ceiling, combined with higher gasoline prices and limited supply of small vehicles, hurt the industry last month, he said.

Toyota reported sales of 130,802 Toyota, Lexus and Scion vehicles, down from 169,224 a year earlier. The drop was narrower than the 25 percent average decline of three analyst estimates compiled by Bloomberg.

“July marked the first full month of normal production for eight of 12 North American-built models,” Jeff Bracken, U.S. vice president for Toyota-brand sales, said in a conference call. Those models include Camry, Corolla and Avalon sedans, Matrix hatchbacks, Highlander and Sequoia sport-utility vehicles, Sienna minivans and Venza wagons.

Supplies of the Prius, the top-selling hybrid, rose in July and will keep growing for the rest of the year, said Randy Pflughaupt, the Toyota City, Japan-based company’s U.S. group vice president. Full-year sales of the model “should end ahead of last year,” he said in a conference call.

The addition of a redesigned Camry, a new Yaris subcompact, the Prius v wagon and the Scion iQ minicar later this year should accelerate Toyota’s sales rebound, Bracken said.

Toyota’s July market share fell to 12.3 percent from 12.8 percent a year earlier, according to Autodata.

Honda, the Japanese automaker that relies most on U.S. sales, said deliveries of its Honda and Acura vehicles fell to 80,502 from 112,437, the biggest volume drop of any automaker in July. The decline was steeper than the 23 percent average of three analyst estimates.

The Tokyo-based automaker’s sales have been crimped by a continuing shortage of its revamped Civic small car because of quake-related parts disruptions.

Consumer Reports this week said it couldn’t recommend the latest version of the Civic, Honda’s second-biggest selling U.S. model. The magazine cited a decline in agility and interior quality, a choppier ride, longer stopping distances and increased road noise, compared with the previous Civic.

Civic sales tumbled 40 percent last month and have dropped 9.7 percent this year.

Honda’s market share fell to 7.6 percent from 10.7 percent, Autodata said.

Nissan, Japan’s second-biggest automaker, sold 84,601 vehicles last month, rising from 82,337 in July 2010. Deliveries for the Yokohama-based company were expected to be little changed, based on the average of three analysts’ estimates.

“Nissan closed out its fiscal first quarter in June, so it looks like it may have pulled ahead some sales,” said Caldwell, the Edmunds analyst.

Nissan’s July market share improved 0.2 percentage point to 8 percent, according to Autodata.

Hyundai, South Korea’s largest automaker, sold 59,561 vehicles to U.S. customers, an increase from 54,106 a year earlier. Gains for the Seoul-based company were led by its revamped Accent subcompact car and Sonata and Genesis sedans.

Kia, Hyundai’s affiliate, sold 45,504 vehicles, a gain of more than 10,000 units from July 2010. Sales of the Optima sedan more than tripled, while deliveries rose 26 percent for the Soul wagon and 47 percent for the Sorento SUV.

Combined volume for Hyundai and Seoul-based Kia, affiliates that maintain separate operations in the U.S., totaled 105,065, trailing only GM, Ford, Toyota and Chrysler.

Hyundai’s market share rose to 5.6 percent from 5.2 percent, and Kia’s was 4.3 percent, up 0.9 percentage point, according to Autodata.

Sales for Subaru, the auto brand of Japan’s Fuji Heavy Industries Ltd., fell 9.4 percent, and Mazda Motor Corp. sold just 0.2 percent more vehicles than a year ago.

Among smaller brands, Mitsubishi Motors Corp.’s sales rose 41 percent and Suzuki Motor Corp. had a 25 percent increase in July.

Industry sales will rebound in the second half as vehicle availability increases, said Alan Baum, a West Bloomfield, Michigan-based industry consultant at Baum & Associates. The improved supply probably will lead to lower vehicle prices late this year, he said.

“The issue is going to be how aggressive Toyota and Honda in particular are in terms of pricing and trying to get their sales back in order,” he said in a Bloomberg Television interview.