SEOUL -- South Korean car makers, led by Hyundai Motor Co. Ltd., saw overall sales rise in March thanks to strong exports, but domestic sales were hit by a slowing economy.
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.
The country's five car makers -- Hyundai Motor, Kia Motors Corp., GM Daewoo, Renault Samsung and Ssangyoung Motor Co. -- sold a combined 314,868 vehicles in March, up five percent from 299,829 a year earlier, according to data they issued separately.
But sales at top car maker Hyundai, 10-percent-owned by U.S.-German automaker DaimlerChrysler AG, fell 0.2 percent last month to 159,743 units, as domestic sales dropped 10.3 percent, offsetting a 7.7 percent increase in exports.
"Domestic sales fell, as consumer sentiment is very weak due to the war in Iraq and the slowing domestic economy," said Hyundai spokesman William Park.
"Sales of high-end sedans fell while compact cars still look competitive," said Kim Sang-ik, an analyst at Daishin Securities.
Consumer confidence in the economy deteriorated in the first quarter from the fourth quarter of 2002, rattled by worries over the nuclear standoff in North Korea and the conflict in Iraq, the central bank said on Monday.
But exports of cars continued to rise, helped by the weaker won and their improving brand image in overseas markets, analysts said.
The Korean won fell about three percent against the dollar in March from the previous month, making exports more competitive.
But analysts said auto makers faced tough times ahead, as higher petrol prices dampened car consumption while an early end to the U.S.-led war in Iraq appeared unlikely.
"Hyundai's sales are likely to fall further in the second quarter as the war in Iraq is expected to drag on and labor relations are likely to get worse," Kim said.
Hyundai is set to begin negotiations with labor unions over working conditions and wages later this month.
Hyundai shares fell four percent to close at 23,050 won on reports the government has asked the largest shareholders of troubled card companies to buy unpopular bonds issued by the card firms. Hyundai Motor has a 60 percent stake in unlisted Hyundai Card Co.
"Automobile demand in U.S. market is not likely to increase for a while and competition in the local market is also increasing, after the launch of GM-Daewoo last year," said Lim Changgue, a fund manager at Samsung Investment Trust Management.
Third-ranked GM Daewoo Auto & Technology Co, which was launched after General Motors took over ailing Daewoo Motor Co, said sales last month fell 2.5 percent to 37,162 units.
Sales at Kia Motors Corp., Hyundai's affiliate and the second-largest auto maker, rose 19.4 percent in March from a year earlier, to 93,633 units.
Renault Samsung Motors Inc, one of South Korea's smallest auto makers, said it sold 10,609 vehicles in March, up 25 percent from a year earlier.