SEOUL -- Hyundai Motor Co. and other South Korean auto makers saw domestic sales drop more than a quarter in May from a year ago and are expected to face a few more months before demand moves up a gear.
Analysts said May sales, up 19.0 percent abroad but down 26.4 percent at home, were in line with expectations but disappointing on the domestic front nonetheless. They said the domestic market would remain bumpy until around October.
Hyundai and four other South Korean auto makers -- Kia Motors Corp., GM Daewoo, Renault Samsung and Ssangyong Motor Co. -- sold a combined 320,642 vehicles in May, down 3.1 percent from a year earlier, according to data released separately by each company.
Sales at Hyundai, the largest of the five and 10 percent owned by U.S.-German maker DaimlerChrysler AG, dipped 0.8 percent in May from a year earlier as a 27.4 percent drop in domestic sales more than offset a 20.6 percent export rise.
"Domestic sales will continue to be weak for the time being and I don't expect any major rebound before around October, as many economists also predict for the general consumption trend," said Chae Kyoung-sup, an analyst at Shinyoung Securities.
LABOR STRIFE LOOMS
South Korea's economy, the fourth-largest in Asia, contracted in the first quarter for the first time in more than two years as domestic consumption fell amid concerns about North Korea's nuclear ambitions and a global economic slowdown.
Sales in May at the five car makers showed a drop of 8.2 percent from the previous month, both for exports and domestic sales.
Analysts said an expected flare-up in labour disputes could also threaten the car markers when they begin negotiations with unions over wages and conditions.
Employers are expected to face a tough bargaining season after the government of President Roh Moo-hyun, a former labour lawyer, took a labour-friendly stance over a series of worker protests this year.
"Auto makers usually experience tough industrial action during the bargaining season, but it could be a big problem if such actions last for a longer period than expected this year," said Cho Soo-hong, an analyst at Dongbu Securities.
At the four smaller auto makers, poor domestic sales overshadowed their still strong exports too. Sales at Kia Motors, a Hyundai affiliate and the country's second-largest auto maker, fell 4.4 percent from a year earlier to 90,301 units.
Third-ranked GM Daewoo Auto & Technology Co, which was launched after General Motors took over bankrupt Daewoo Motor Co, said sales last month fell 2.6 percent.
Renault Samsung Motors Inc, one of the country's smallest auto makers, said it sold 9,552 units in May, down 8.5 percent from the same 2002 month.
Sales at sports utility vehicle maker Ssangyong Motor fell 18.4 percent to 12,694 units in May.