SEOUL - A domestic recession and slumping exports slashed South Korea's vehicle production by 35.1 percent in the first nine months of 1998 to 1,358,588 units, according to figures from the Korea Automobile Manufacturers Association.
Exports have been the greatest disappointment. Contrary to earlier hopes, Korean automakers have been unable to reap any dividends from the devalued won because of recurring labor unrest. Korea's exports dropped 2 percent to 905,013 units in the period from January through September.
With the exception of Daewoo Motor Co. Ltd., which posted a 41 percent jump in exports to 371,902 units as it launched sales in the United States, the export performances of all other Korean automakers deteriorated. Kia Motors Corp., while under bankruptcy court protection, saw its exports decline 20.8 percent from a year earlier to 182,792 units. Exports by its similarly bankrupt commercial-vehicle affiliate, Asia Motors, plunged 55.4 percent to 9,504 units.
Hyundai Motor Co.'s exports slipped a relatively modest 14.5 percent to 333,044 units.
In the home market, consumer spending has been nearly choked off as anxiety mounts about the future course of the Korean economy.
As Korea grapples with negative economic growth - the first such episode in postwar history - new-car buyers have been avoiding showrooms despite tempting new offerings. Domestic registrations for the period fell 55.1 percent to 508,312 units.
Sales of luxury and mid-sized cars have been hardest hit by the recession.
Even newcomer Samsung Motors, which produces a Nissan Altima-based family of near-luxury sedans, has had trouble meeting its first-year sales projections, with sales of just 32,793 units. The company had forecast sales of 80,000 this year. Nonetheless, it has managed to make serious inroads into the market share of established players Hyundai, Daewoo and Kia.
Frugal-minded consumers have turned to minicars with engines under 800cc, making that segment the industry's sole bright spot.
Daewoo outmuscled industry leader Hyundai as its Matiz and Tico have captured the No. 1 domestic sales spot with 74,865 units. Hyundai's Atos trails with sales of 40,929 units.
Kia does not offer a minicar.