It is too early to get excited about output
figures in South Korea, but at least the car market seems to have turned the corner and to
have begun the long climb back to where it was in 1997. Having plunged by nearly 30% in
1998 to a five year low, growth of 28.1% over the first two months of 1999 would look to
have rectified the situation, but that would not be the actual case. Although output rose
by 28.1% for the two months to 294,062 from 229,524, that is more a reflection on how bad
the January 1998 result had been rather than how strong the current growth rate is. The
6.8% gain in February to 139,786 from 130,915 might be a better indicator.

Having sunk from 2.31 million in 1997 to
just 1.62 million last year, the sector will have done very well if it can get back to
around 1.92 million in full year 1999, and for the moment that is where we expect to see
it end. That would represent growth for the year of 18.5%, and it could be at least 2001
before the sector gets back to the record breaking days of the recent past.

There is still a lot to do in South Korea
with regard to sorting out the problems for the sector. The Samsung model really ought to
be dropped immediately, but that cannot be the case for political rather than economic
reasons. But Hyundai and Daewoo both know now what needs to be done, and they have
demonstrated in the past that they can be just as determined as the Japanese when they
have a target in their sights and no one should write them off too quickly.

Truck sector rebounding quickly

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The news in the commercial vehicle sector
is much more encouraging. The sector collapsed by more than a third in 1998, but got back
onto the upward path before the close of the year, and that has spilled over into 1999.
Output for the first two months was 31.3% ahead of last year at 34,380 from 26,191, and at
the current rate the full year could finish around the 260,000 mark. That would be nowhere
near a record for the sector, but it would put it back more or less where it was in 1997
(266,928 built).

Hyundai is leading the charge out of the
doldrums, but the troubled Asia Motors is also playing a considerable part and has
virtually trebled output year to date. However, when it is realised that Asia Motors built
16,000 commercial vehicles in both 1994 and 1995, it is soon realised just how far they
still have to go.

Bus output still shaky

Output of buses rose by 13.8% for the two
months to February at 28,184 from 24,776, but that wasn’t too difficult given the levels
of output early in 1998. What will not be judged to be helpful will be the 4.4% dip in
February itself at 13,667 from 14,289 and the sector may take quite a while before it can
be judged to be back at planned levels. We do expect growth for the full year, probably
about 16% which would take output back to 196,000 in 1999 from the 159,687 of 1998 and the
242,871 of 1997.

At first sight it would seem that Hyundai
have failed where others have succeeded year to date. Whilst all of the other contenders
in the sector have seen build levels bounce back quite strongly YTD, Hyundai themselves
are still 0.8% down on last year. But that masks the fact that Hyundai kept their lines
running at near normal levels in early 1998 and on that basis they have actually done well
enough so far, but should show more positive results over the months immediately ahead.