July 15 (Bloomberg) -- Hyundai Motor Co., South Korea's largest automaker, will raise vehicle prices an average of about 2 percent worldwide after the cost of steel jumped more than 60 percent this year.

``We can't hold off any longer,'' the Seoul-based automaker said in a statement today. The increases will come into effect next month.

Hyundai joins General Motors Corp. and Toyota Motor Corp. in boosting vehicle prices to cover rising materials costs even as greater job insecurity and slower economic growth damps demand in major markets. Industrywide sales in the U.S., the world's largest auto market, dropped 10 percent in the first half.

Hyundai's increase ``isn't enough to cover the higher costs, but it's hard for them to boost prices more without crimping sales,'' said Mike Oh, a Seoul-based analyst at Nomura Securities Co. ``The environment has turned so negative for carmakers.''

Oh has a ``neutral'' rating on Hyundai.

Kia Motors Corp., South Korea's second-biggest automaker and an affiliate of Hyundai, is also evaluating possible price increases, spokesman Michael Choo said by phone. No decision has been made yet, he added.

Steel sheet prices have increased more than 60 percent this year, while costs for tires and logistics have risen about 20 percent, Hyundai said in the statement.

Price Increases

Hyundai raised prices for Elantra sedans and Accent small cars in the U.S. last month, according to the statement. The August increase will be in addition to this.

The automaker has avoided much of the slump in U.S. sales as rising gasoline prices boost demand for more fuel-efficient vehicles. Its June sales climbed 1.3 percent, while the overall market plunged 18 percent. Hyundai's first-half U.S. sales slipped 2.3 percent.

Hyundai closed down 4.3 percent at 67,400 won in Seoul trading today, before the announcement. Kia fell 6.7 percent to 10,400 won. The benchmark Kospi index tumbled 3.2 percent.

Separately, Hyundai's Korean plant workers also plan to stage stoppages this week because of a pay dispute. The workers will down tools for four hours in both shifts tomorrow and for six hours two days later, the union said on its Web site.

The union is seeking increases of about 9 percent in base pay. The company hasn't made an offer yet.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

Last Updated: July 15, 2008 05:39 EDT