SEOUL -- South Korean automakers, led by Hyundai Motor Co, reported a 26 percent rise in July sales on Monday as a flood of new models enticed local shoppers back to showrooms while foreign demand remained solid.
The outlook for the car industry, which accounts for a tenth of South Korean exports, has also been helped by stabilizing steel costs, better car pricing and reduced labor unrest, analysts said.
"A gradual recovery in domestic sales has been under way, with more stable raw material costs considerably easing the burden on automakers," Samsung Securities analyst Kim Hak Ju said.
"Weaker-than-usual industrial unrest linked to annual wage negotiations is also a plus for auto sales," he added.
A sluggish local economy has eroded unions' bargaining power, while a bribery and fraud scandal touching some Korean unions has also weakened their negotiating position.
Exports by the country's five automakers, which have held up well in recent months, rose 28 percent to a combined 335,043 units in July from a year earlier.
Offering signs of a long-awaited recovery in domestic consumer demand, local sales jumped 20 percent to 101,950 vehicles. Overall car sales last month rose to 436,993, up from 347,216 a year ago.
Top carmaker Hyundai Motor Co. posted an 11 percent rise in vehicle sales in July, aided by growing consumer demand for its Grandeur premium sedan and other new models.
Hyundai, the world's seventh-largest carmaker, sold 207,995 vehicles last month compared with 186,633 units a year before. Exports rose 9.2 percent to 155,593 units, while domestic sales jumped 18.8 percent to 52,402 units.
"We can't say for sure whether the local economy has turned around. But we are very happy to see our Grandeur sedan ranking top in the local passenger car segment last month," said Park Sang Woo, a Hyundai spokesman.
"The impact of the new models is helping drive our local auto sales higher."
Hyundai's new Grandeur and NF Sonata sedans, as well as its Tucson SUV, have lured local customers back to showrooms, bolstering market expectations of a recovery in consumer demand,
Last week, Hyundai reported a surprise increase in quarterly net profit on fewer bad loans and warranty liabilities, although its operating profit tumbled a third due to high steel costs and a strong won currency.
Hyundai has bolstered its profile on the world stage by spending heavily to improve vehicle quality. Hyundai opened its first U.S. plant, in Alabama, in May. Analysts see the plant as a litmus test for the company's success in overseas markets.
STRONG LOCAL SALES
Hyundai's affiliate, Kia Motors Corp., said its July sales soared 45 percent to 114,406 units. Its new subcompact Morning model and smaller Sportage SUV helped exports surge 54 percent to 90,221 units.
Local sales also jumped 27 percent to 24,185 units.
Ssangyong Motor Co., owned by China's Shanghai Automotive Industry Corp., posted a healthy 51 percent rise in July sales, led by a near tripling of exports to 5,438 units.
GM Daewoo Automotive and Technology Co., South Korea's third-largest car maker, said July exports jumped 42 percent to 83,592 units, taking total sales to 91,999, up 38 percent.
Its domestic sales rose 6.4 percent to 8,407 units.
General Motors, the world's largest auto maker, 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 July sales rose by nearly a third to 9,151 units.