Nissan Motor on Tuesday said it has established a wholly owned sales subsidiary in South Korea to prepare for its first foray into the South Korean market by the middle of 2005.

Dow Jones said Nissan aims to catch up with Toyota and Honda which already have sales companies in South Korea.

The report said Nissan established the sales firm, dubbed Nissan Korea Co., on February 19, capitalized at 1.0 billion won, but is considering boosting the capital to up to KRW10 billion won in the future.

A Nissan spokeswoman told Dow Jones Nissan has yet to decide on what models it will launch in South Korea and what its sales target will be.

The report said Japanese carmakers are looking at South Korea as a potential growth market in Asia and need growing markets to compensate for an expected lack of growth in the Japanese market in the future.

Dow Jones said Toyota began selling its Lexus luxury sedan in South Korea in January 2001 after establishing a sales subsidiary there in 2000. Toyota reportedly sold 3,700 vehicles in South Korea in 2003.

The report said Honda added car sales operations to its motorcycle sales unit in South Korea last year and plans to begin sales this year with a target of 2,000 vehicles.

Dow Jones noted that sales conditions for foreign carmakers are improving in South Korea – in 1995, the country lowered the tariff on imported vehicles to 8% from 20% and lifted a ban on Japanese vehicle imports in 1999.