SEOUL -- South Korean carmakers, led by market leader Hyundai Motor Co., reported a 15 percent rise in April sales as higher oil prices boosted foreign demand for more fuel-efficient compact models.
Overseas sales, which were particularly strong in emerging markets such as China, Russia and India, helped take up the slack from weak domestic sales. But South Korean automakers continued to suffer from dwindling margins due to a strong won currency, pricey raw materials and a sluggish local economy.
Exports by the country's five automakers, which have held up well in recent months, saw a hefty 22 percent rise to a combined 346,425 units in April from a year earlier. That compared with a stubbornly weak local market, where combined sales fell 6.7 percent to 92,476 vehicles.
Overall car sales last month rose to 438,901 from 382,989 a year ago. "High oil prices are working in favor of Korean automakers not only abroad but at home as price-conscious consumers are turning to small, fuel-efficient models," said Suh Sung-moon, a senior analyst at Dongwon Securities.
Global oil prices are down about 13 percent from a record high of $58.28 struck on April 4, but continue to hover around $50 a barrel. Analysts expect the domestic economy to pick up in the second half and help domestic auto sales recover from a prolonged slump. But marking a potential threat to sales prospects, Hyundai will hold wage talks with its powerful 40,000-member union in coming weeks.
Big pay rises could dent profits and any strike actions could lead to lost production and hurt sales. Smaller rivals are expected to follow suit and see similar wage negotiations.
Hyundai's small-size sedan Elantra, Kia Motors Corp.'s compact Rio, and GM Daewoo Motors' Matiz were front runners driving foreign sales. After years of heavy spending to improve quality and image, Hyundai is dramatically raising its profile on the world stage, led by growing sales in markets such as China, India, and Russia.
Hyundai sold 213,412 vehicles in April, compared with 186,621 units a year earlier. Exports jumped by a quarter to 168,675 units, while domestic sales fell 13.2 percent to 44,737 units. Hyundai's improving reputation has allowed it to offset rising costs by pushing through some price increases. It expects the selling price of its exports to average $11,100 this year, up from $10,900 in 2004 and $10,200 in 2003.
Last week, Hyundai reported a surprise 14 percent jump in first quarter profit on strong contributions from its Chinese and Indian operations. But operating profit tumbled on a strong won. Hyundai controls half the home market and aims to become a top five global car maker by 2010 together with affiliate Kia.
Kia said its April sales rose 19 percent to 115,008 units, buoyed by a 23 percent jump in exports. Local sales gained 5.3 percent to 23,497 units. GM Daewoo Automotive and Technology Co., South Korea's third-largest carmaker, said on Monday April exports rose 13.5 percent to 81,289 units, taking total sales to 90,852, up 12 percent. Its domestic sales rose 2.1 percent to 9,563 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 April sales soared 50 percent to 10,556 units. Ssangyong Motor Co., owned by China's Shanghai Automotive Industry Corp., saw its April sales sliding 23 percent to 9,073 units, hit by sluggish local demand.