South Korea February auto sales down, outlook dim

Sales by South Korean carmakers, led by Hyundai Motor Co., fell 1.6 percent last month, and could struggle this year amid fierce competition on global markets and sluggish domestic demand, with few new models to boost sales, analysts said.

"South Korean automakers, especially Hyundai and Kia Motors Corp., will suffer pain this year," said Choi Dae-sik, auto analyst at CJ Investment Securities. "The local economy has not yet generated car demand, and a firmer won against the yen cut Korean firms' competitiveness against their Japanese peers."

South Korea's service sector output fell a seasonally adjusted 1 percent in January from December, dampening hopes for a recovery in domestic demand.

February sales were also dented as there were fewer business days last month due to the long lunar new year holidays.

Combined sales by South Korea's five automakers fell to 382,527 vehicles in February from 388,939 a year earlier, and were down 9.2 percent from January's 421,146 units.

Exports fell 2.3 percent to 293,853 vehicles from a year ago, but domestic sales edged up 0.6 percent to 94,446.

Auto sales abroad, which account for 10 percent of total South Korean exports and are an important growth driver in Asia's third-largest economy, rose an estimated 1.7 percent in value in February from a year earlier, commerce ministry data showed.

Hyundai, which with affiliate Kia is the world's sixth-largest auto maker by sales volume, saw its February sales drop to 191,231 vehicles, down 5.9 percent from a year ago and down 5.8 percent from January, when sales were hit by a labor dispute.