South Korea sells record number of cars in 2002

SEOUL, Jan 17, 2003; Reuters reported that South Korea's top automaker, Hyundai Motor Co, and its domestic rivals sold a record number of cars in 2002, an industry group said on Friday, although analysts said the outlook this year was dimmer.

Racy new models, improved quality and extended warranties have propelled South Korea into the world's fifth-largest producer of automobiles behind the United States, Japan, Germany and France.

Overall, domestic sales and exports rose 6.1 percent to 3.13 million vehicles last year, the Korea Automobile Manufacturers Association said in a report.

Local automobile sales in 2002 rose 11.8 percent from a year earlier to 1.62 million vehicles, as government tax breaks on automobile purchases lured more customers into showrooms, in line with South Korea's efforts to drive economic growth via consumption, it said.

The tax breaks are no longer in effect and with the government taking steps to rein in galloping consumer debt, the prospects for domestic sales in 2003 were not as bright, analysts said.

"The U.S. economy is not getting any better, while domestic consumption is slowing," said Cho Soo-hong, an auto analyst at Dongbu Securities.

The South Korean government projects 2003 economic growth at around five percent versus around six percent last year.

Local sales of Hyundai's New EF Sonata and other passenger cars in 2002 rose 15 percent from a year ago to 1.23 million vehicles, the report said.

Domestic sales of Hyundai's Santa Fe, Kia Motor Corp's Sorento and other sports utility vehicles (SUVs) rose 58 percent over the same period to almost 300,000 units.

Sales of large-sized vehicles rose 24.5 percent over the same period to 112,330 units, while sales of subcompacts, such as GM Daewoo's Matiz, fell 30.4 percent to 57,178 units, it said.

In contrast, automobile exports in 2002 rose just 0.6 percent from a year ago to 1.51 million units, the association said.

Hyundai saw 2002 exports rise 15.9 percent from a year ago to 928,068 vehicles, while affiliate Kia, South Korea's second-largest automaker, 2002 exports fall 4.9 percent from a year earlier to 442,425 units, it said.

Third-ranked GM Daewoo Auto & Technology Co saw exports drop 42.6 percent over the same period to 126,516 due to its restructuring prior to the completion of a takeover of key assets by General Motors Corp <GM.N> and partners, the report said.