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Monday, 10 December, 2001, 13:59 GMT
South Korea predicts record car output
A Hyundai car
Demand for cheaper cars is expected to benefit Korea
Car production in South Korea is expected to reach an all-time high next year, a new survey has predicted.

According to the Korea Automobile Manufacturers Association (KAMA), production should increase to 3.15m cars - a rise of 3.7%.

The country's car manufacturers are expected to benefit from an increase in global demand for cheaper cars, as the economic downturn causes people to tighten their purse strings.

The association also says demand will be helped by lower excise taxes and next year's World Cup Soccer finals.

The survey predicts that total car sales in South Korea will increase by 4.2% to 1.5m.

Exports to rise

KAMA expects Korean cars sales to increase not only in the domestic market but also overseas.

The country is estimated to export 1.63m cars in 2002, a rise of 3.2%.

Exports of Korea's smaller cars are expected to do particularly well, as the global economic slowdown sparks interest in cheaper vehicles.

Korean car exports depend hugely on the US market which accounts for 34% of Korean vehicle exports by volume, and 38% of exports by value.

Exports to North America are expected to rise by 6.3% to 760,000 vehicles next year, while shipments to Europe should grow by 6.8% to 510,000.

About 110,000 cars are forecast to be exported to the rest of the Asia-Pacific region, up 2.8% from this year.

Two leaders

Another factor behind the increase in production is expected to be a revival in fortunes at Daewoo thanks to its deal with the American car giant General Motors.

A Hyundai car
Hyundai accounts for almost a half of all car sales in South Korea
The US car maker paid $400m for a 67% stake in the bankrupt Korean firm earlier this year.

Daewoo is expected to take market share from Korea's leading car producer Hyundai, which accounts for almost a half of all car sales in the country.

Hyundai is the eleventh biggest carmaker by volume in the world and is among the best performing car companies this year.

It forecast a 15.6% increase in US sales next year, indicating it could be among the few winners to emerge from the current economic slowdown.

Not so rosy this year

This year's exports, according to KAMA, are down 5.8% from last year's 1.58m cars, mainly due to the economic downturn in major export markets.

An expected 2% rise in domestic sales will not enough to offset the fall in exports, and overall sales of Korean cars are predicted to drop by 2.4% to 3.04m.

Earlier this year the association said that if the recession in the US continued, Korea's auto output could drop 8.7% to 2.7m units.

See also:

21 Sep 01 | Business
GM signs Daewoo deal
13 Nov 01 | Business
Hyundai Motor reports record profit
01 Nov 01 | Business
US car sales booming
16 Sep 01 | Business
US motor industry suffers shortages
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