S. Korea`s car sales drop 8 pct in February, outlook grim

SEOUL, March 2 (Yonhap) -- South Korean automakers posted an eight percent drop
in sales last month as the global downturn wilted demand for their vehicles amid
sluggish consumption at home, according to the companies on Monday.
The near-term outlook for the Korean carmakers, led by Hyundai Motor Co. and its
affiliate Kia Motors Corp., remains clouded as consumer demand in the United
States, Europe and elsewhere has collapsed on the deepening economic downturn
worldwide, analysts say.
Vehicle sales by the nation's five automakers, including GM Daewoo Auto &
Technology Co., Renault Samsung Motors Co. and Ssangyong Motor Co., slipped to
353,744 units in February, compared with 386,415 units sold for the same period
last year.
Hyundai saw its sales fall 3.2 percent to 203,236 vehicles last month, with
domestic sales declining 6.1 percent to 44,848 units and exports falling 2.3
percent to 158,388 units,
Like other global peers saddled with the deepening global economic crisis,
Hyundai is cutting working hours and idling some of its production lines to cope
with rising inventories of unsold vehicles.
Hyundai, the world's fifth-largest automaker along with Kia, plans to cut output
at their plants in South Korea by 25 to 30 percent in the first-quarter of this
year.
Kia's sales declined 3.9 percent to 95,315 units. Domestic sales rose 13.5
percent to 27,307 units, while exports declined 9.5 percent to 67,828 units.
GM Daewoo, the South Korean unit of U.S. automaker General Motors Corp., said
sales dropped 30.4 percent to 43,596 units last month.
Faced with a looming liquidity crisis, GM Daewoo has sought one trillion won
(US$637 million) in financial assistance from the nation's state-run Korea
Development Bank.
Renault Samsung, the South Korean carmaker 70 percent owned by Renault SA of
France, was the only carmaker that posted a rise in February sales.
Renault Samsung, which mostly sells cars at home, saw sales rising 11.7 percent
to 10,408 units in February, thanks to the company's promotion to provide
interest-free loans on new cars.
Ssangyong, which secured bankruptcy protection in January, said sales plummeted
69.4 percent to 2,369 units last month.
The dismal result underlined difficulties facing Ssangyong's survival, as
consumers have shunned buying cars built by the potentially bankrupt company,
analysts say.
The February decline in auto sales came as South Korea's export-dependent
economy, Asia's fourth-largest, is widely expected to fall into its first
recession in a decade.
Earlier in the day, the government data showed February exports fell 17.1 percent
from a year earlier.
Finance Minister Yoon Jeung-hyun said last month the economy would shrink two
percent this year.
"Korea is facing a secular decline in overseas demand, which will probably last
for the rest of this year," said Daniel Melser, senior economist with Moody's
Economy.com, said in a report.
Melser said Moody's Economy.com expects the South Korean economy to contract
about four percent this year.
"Needless to say these forecasts represent deep economic pain being felt right
across the country, though much of it will unfortunately be concentrated in the
manufacturing and export sector," the economist said.
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