SEOUL -- South Korean carmakers, led by Hyundai Motor Co., increased sales by 49 percent in July, with exports racing ahead to offset falling sales at home where consumer spending has been hobbled by big debts.
Analysts said that despite the planned launch of new models on the home market, the outlook is clouded by rising labor costs and slowing economic growth in China.
The country's five manufacturers saw exports jump 94 percent from July last year to a combined 262,966 units, while domestic sales slid 13.5 percent to 84,840 vehicles.
Hyundai, which controls half the domestic market and is the world's seventh-largest auto maker, said its July sales nearly doubled to 186,929 vehicles from 97,702.
Its exports surged to 142,815 units from 57,494 units a year earlier when production was hit by a 45-day strike that stretched from late June until early August.
Hyundai's local sales rose 10 percent to 44,114 units. "Last year, there was an extended strike that hampered operations severely," said a Hyundai spokesman. "The jump in numbers was largely due to a low base effect."
Hyundai sold a total of 196,242 vehicles in June, including a monthly export record of 149,921 units.
"We keep an overall rosy picture on the export front, though growth momentum may slow somewhat compared with a year ago," said Joe Lee, auto analyst at Daiwa Securities.
"The launch of new models may give a much-awaited boost to the local market but it will be short-lived given frail consumer spending."
Hyundai will this month launch an upgraded version of its EF Sonata sedan, a top seller in Korea, while the Tucson, a smaller version of its popular Santa Fe sport utility vehicle (SUV) is to hit foreign showrooms later in the year.
WEAK DOMESTIC SALES
Labor strife is a key deterrent to doing business in Korea, according to foreign investors, and part of the reason for the relatively low value of local shares -- the "Korea Discount".
Poor labor relations have also been cited as one of the obstacles blocking Hyundai from achieving its goal of becoming one of the world's top five auto makers by 2010.
Last month, Hyundai wrapped up its quickest labour settlement since 1995 by agreeing to a pay rise of just over 6 percent. The settlement followed a five-day strike.
Hyundai's affiliate Kia Motors Corp. said its July sales rose 27 percent to 77,843 units, buoyed by a 52 percent jump in exports to Europe.
Kia, which last week slashed its 2004 local sales target to 295,000 vehicles from a previous 450,000 units, saw domestic sales fall 17 percent to 19,122 units in July.
GM Daewoo Automotive and Technology Co., South Korea's third-largest auto maker, said July exports rose 59 percent to 59,195 units, taking total sales to 67,097. Exports of its small Kalos and Lacetti sedans to Western Europe bolstered sales.
General Motors, the world's largest auto maker, took a majority stake in some of the assets of Daewoo Motor in 2002, creating the unlisted GM Daewoo.
Stagnant domestic demand hit SUV maker Ssangyong Motor Co. whose July sales tumbled 29 percent to 8,913.
Renault Samsung Motors Inc., the South Korean unit of French auto maker Renault S.A., saw its July sales slump by 48 percent to 7,024 units.