SEOUL - South Korean car makers, led by Hyundai Motor, posted a near 20 percent rise in February sales, but analysts said there may be little more blue sky this year as high oil prices and uncertain economic prospects loom.
South Korea has become the world's fifth-largest producer of automobiles, behind the United States, Japan, Germany and France, helped by racy new models, improved quality and extended warranties.
South Korea's five car makers -- Hyundai Motor Co. Ltd., Kia Motors Corp., GM Daewoo, Renault Samsung and Ssangyoung Motor Co. -- sold a combined 283,793 vehicles in February, up 19.1 percent from 238,303 a year earlier, according to data that the car makers issued separately.
Last months' sales at Hyundai Motor, South Korea's largest auto maker, rose 22 percent to 144,850 units from a year earlier, driven by brisk exports of popular Santa Fe SUVs and the compact Avante XD car.
Hyundai, 10 percent owned by U.S.-German auto maker DaimlerChrysler AG, is reaping the benefit of past investment in upgrading and improving the reliability of its cars.
But analysts warn car demand is likely to be hit by higher oil prices and increasing economic uncertainties.
Japanese rivals posted a slight increase in February sales, but face a similar weak outlook, analysts said.
"Higher oil prices amid dragging concerns about a war against Iraq are expected to dampen consumer demand for new cars," said Chung Doo-sun, a fund manager at CJ Investment Trust Management.
However, analysts expect brisk sales of more economical compact cars to continue, supporting overall Korean car sales.
Hyundai's Avante XD was the most popular car in South Korea last month, with 8,671 units sold in the domestic market, resulting in a 50 percent market share.
SLOWING DOMESTIC SALES
Hyundai, disaffiliated from the Hyundai Group in August 2000, said exports in February had risen 36 percent from a year earlier to 87,667 units while domestic sales had risen 5.3 percent to 57,183.
Its February sales fell 7.4 percent from the previous month, as the number of working days decreased due to the lunar New Year holidays and as domestic spending wilted, because of government steps to reign in galloping consumer debt.
"Sales growth (year on year) is likely to slow from next month, as economic conditions are not good," said Suh Sung-moon, analyst at ING Barings.
Hyundai shares closed 3.4 percent higher at 25,950 won ($21.74) on Monday, outperforming a 2.54 percent rise in the broader market.
Sales at Kia Motors Corp., Hyundai's affiliate and the country's second-largest automaker, were 21 percent higher in February than a year earlier, at 80,602 units.
Third-ranked GM Daewoo Auto & Technology Co, which was launched after General Motors took over ailing Daewoo Motor Co, said sales last month had been down three percent, at 34,311 units.
Renault Samsung Motors Inc, one of South Korea's smallest auto makers, said it had sold 10,038 vehicles in February, up 45.4 percent from a year earlier. France's Renault SA took over the former auto unit of South Korea's Samsung Group [SAGR.UL] in September 2000 and has since introduced two new types, the SM 5 mid-sized sedan and the smaller SM3 model.
Sales at SUV maker Ssangyong Motor rose 30 percent to 13,992 units last month, driven by growing popularity of its Musso Sports SUV truck.