SEOUL -- South Korean automakers, led by Hyundai Motor Co., said sales in February fell 2 percent from a year ago because of slack domestic demand and fewer selling days in the month due to the timing of holidays.
But analysts offered conflicting opinions on whether the sector's prospects would improve this year as a result of a turnaround in domestic spending.
"Had it not been for the public holidays, sales would have risen rather than declined," said Suh Sung-moon, an auto analyst at Dongwon Securities. The Lunar New Year holidays fell in February this year but were in January in 2004.
Exports by the country's five automakers have fared well in recent months and were up another 4.6 percent in February to a combined 250,883 units.
That took up the slack from a stubbornly weak local market. Domestic sales fell 19.8 percent to 72,078 vehicles from the year-ago period. Overall car sales in February fell to 322,961 from 329,706 a year ago.
While a stronger won currency and higher steel prices have dragged on local carmakers, mounting optimism over a broader economic recovery is helping brighten the prospects for improving local sales, analysts say.
"We are seeing a few encouraging signals to bet that the long-bearish local auto market may finally turn around from the second quarter," Suh added.
In the latest sign of an improving economy, business sentiment hit a 10-month high in March, a central bank survey showed on Wednesday.
But some remained doubtful about a recovery in consumer spending, saying it may take a couple of months before a firmer trend can be confirmed.
Hyundai, which controls half the home market and aims to become a global top five automaker by 2010 together with affiliate Kia Motors, sold 165,075 vehicles in February, down 1 percent from 166,676 units sold a year ago.
Exports rose 7.2 percent to 130,856 units while domestic sales tumbled 23.2 percent to 34,219.
Hyundai has enjoyed steady sales of its flagship NF Sonata sedan and other models overseas, especially in India and China.
"The marginal fall in overall sales was mostly due to fewer working days last month," said a Hyundai official.
"Otherwise, we saw a strong performance in foreign markets such as India and China." Hyundai ranked first in sales in the Chinese market for a second straight month in February.
Hyundai's affiliate Kia Motors Corp. said its February sales fell 2.4 percent to 80,562 units, with local sales falling 21 percent from a year ago. Exports, buoyed by robust European sales, rose to 63,548 vehicles from 60,908.
With the focus shifting to Europe, where Kia's compact Picanto and Sorento SUV are winning over consumers, exports to the United States tumbled 43 percent to 18,434 units.
GM Daewoo Automotive and Technology Co., South Korea's third-largest carmaker, said February exports declined 5.7 percent to 51,653 units, taking total sales to 58,728, down 7.9 percent. Local sales slid 21.4 percent to 7,075 units.
The world's largest automaker, General Motors, took a majority stake in some Daewoo Motor assets in 2002, creating the unlisted GM Daewoo.
The launch of the large SM7 and the SM5 sedan helped Renault Samsung Motors Inc., the South Korean unit of Renault S.A., recover from a long sales slump. Its February sales jumped 45 percent to 8,807 units.
Ssangyong Motor Co., which China's Shanghai Automotive Industry Corp. recently bought for about $500 million, saw its February sales fell 7.7 percent to 9,789 units.
The firm, which specializes in sport-utility vehicles such as the Rexton and Korando, said on Wednesday it was targeting 2005 sales of 170,000 units, up 25 percent from 2004.