S. Korean Auto Sales Rise on Increased Exports

SEOUL, March 2, 2004; Rhee So-eui writing for Reuters reported that sales at South Korean auto makers surged around a quarter in February from a year earlier, as they pushed an export drive to compensate for sluggish domestic demand.

Local sales continued to shrink as consumers, weighed down in credit card debt, steered clear of car showrooms. But analysts said weak domestic demand may be bottoming out.

Korean auto makers sold 89,909 units domestically in February, 25 percent lower than a year ago, data on Tuesday showed. But February sales were 18.6 percent higher than January, when there was a three-day holiday to celebrate the Lunar New Year.

"Domestic demand remained sluggish, but I would say it's almost close to a bottom," said Lee Dong-won, an analyst at LG Investment & Securities.

Exports, on the other hand, shot up 60 percent in February to 243,007, allowing manufacturers with a more diversified sales base to weather weak domestic demand.

That left overall sales at 332,916.

Hyundai Motor, the country's biggest car maker, which controls half of the local market, said February sales grew 15 percent from a year earlier, against a 12 percent drop in January.

Hyundai's local sales skidded 22 percent to 44,578 units, marking the eighth consecutive month of decline. But its exports jumped 39 percent to 121,541 units, underpinned by increased efforts in overseas marketing.

Kia Motors Corp , the country's second-largest car firm and an affiliate of Hyundai Motor, reported a 21 percent rise in February sales from a year ago, as a 50 percent jump in exports made up for weaker domestic sales.

"We've benefited from the slow U.S. economy to some extent as demand for inexpensive cars increased in the U.S. market," said a Hyundai Motor spokesman. "We see other car makers are also focusing heavily on exports."

Analysts were reluctant to be overly upbeat about Hyundai and Kia's export figures, saying much of the growth came from a rise in inventories at overseas dealerships.

"For Hyundai and Kia, their overseas inventory already exceeded the adequate levels and the export growth we're seeing, albeit positive, isn't very meaningful," said Lee.

As part of efforts to build a low-cost foothold in Europe, Hyundai Motor said on Tuesday it has picked Slovakia as the site for a 700 million euro ($870 mln) plant to make 200,000 Kia-branded vehicles a year.

Shares in Hyundai Motor ended 0.2 percent higher at 50,100 won and Kia shares jumped 4.13 percent to 11,350 won. The overall market was up 1.8 percent.

Meanwhile, GM Daewoo Automotive and Technology Co, which ranks third in the country, more than doubled its February exports to make up for a 23 percent fall in domestic sales.

The car maker, owned by global auto giant General Motors Corp and partners, said overall sales shot up 97 percent, partly due to the normalisation of its overseas network after GM's takeover.

However, sport utility vehicle maker Ssangyong Motor suffered a 25 percent fall in February sales, while sales at Renault-Samsung, the South Korean unit of French auto maker Renault SA, tumbled 39 percent.

Sales at Hyundai Motor rise 15 percent in Feb Sales Kia Motors up 21 pct in Feb Sales at S.Korea's GM Daewoo Up 97 pct in Feb Sales at Ssangyong Motor down 25 pct in Feb Sales at Renault Samsung fall 39 pct in Feb