The Korea Herald reports that the South Korean car market is showing signs of recovery with sales of small models picking up compared to a year ago.

Korea's five auto assemblers - Hyundai Motor Co., Kia Motors Corp., GM Daewoo Auto & Technology Co., Ssangyong Motor Co. and Renault Samsung Motors Corp. - sold 80,684 vehicles in the country last month for a 6.6 percent gain year-on-year. Hyundai, Kia, GM Daewoo and Renault Samsung saw domestic sales growth of 4.7 percent, 25.1 percent, 25.5 percent and 19 percent, respectively. Ssangyong was the only loser.

Sales of passenger cars in January surged 20 percent year-on-year to 44,873 units.
The report said that compacts marked the highest sales growth. January's sales of small cars soared 66.6 percent year-on-year, outdoing subcompacts (22 percent), midsize (27 percent) and large models (3.7 percent).

Among the 3,739 compact cars sold in the month, sales of Hyundai's Click hatchback jumped 43.3 percent year-on-year to 969 units. GM Daewoo's Matiz minicar excelled with sales of more than 4,000 for four straight months from October last year. Its January sales were up 70 percent year-on-year to 4,259 units.

On the other hand, sales of sport utility vehicles, which were relatively popular on the sluggish domestic market last year, fell 16.2 percent. Sales of nine-passenger minivans dropped more than 40 percent due to much higher taxes set to take effect, the Herald said.

In addition to the decreasing popularity of recreational vehicles, the expected rise in diesel fuel prices is pushing customers toward sedans and small cars, according to Seo Sung-moon, a Dongwon Securities Co. analyst who covers the auto industry.

The diesel fuel price which is about 70 percent of the gasoline price will rise to 85 percent in July 2007.

"And of course, high oil price is a major factor for compact cars' popularity," he added.