Hyundai Motor and smaller rivals have reported that March sales jumped more than a quarter, driven by booming exports to Europe on the back of a strong euro.
According to Reuters, a soaring European currency has made the region a lucrative target for South Korean carmakers in search of new sales to offset weak local consumption and a slackening US market.
The euro rose about 10% against the Korean won in March from a year ago and Hyundai and other carmakers reportedly say they are keeping their prices constant in euro terms, which they estimate could generate windfall profits in won terms.
“The European market is slowly taking the centre stage as local auto makers are increasingly attracted by a stronger euro, which increases operating margins,” Sohn Jung-won, an auto analyst at Goodmorning-Shinhan Securities, told Reuters.
The report said analysts were also upbeat about a turnaround in local sales as early as the second quarter, betting that a flood of new models and a reduction in special excise taxes for cars would help lure consumers back into showrooms after high consumer debt in the wake of a credit card boom restrained spending in South Korea over the last year.
Reuters said exports by five South Korean vehicle firms soared 67% to a combined 285,434 units in March from a year ago, taking total sales to 379,368, up 25.7% from a year ago, while domestic sales slid 28% to 93,934 vehicles.
Hyundai Motor, which controls half the local market, reportedly said March sales grew 16% to 185,588 units from a year ago while exports shot up 45% to 140,230 units, helped by brisk sales of the compact Getz and the Matrix minivan in Europe.
Hyundai said it saw exports to Europe rising 10% in March versus a year ago, Reuters said, though the firm’s domestic sales skidded 28% to 45,358 units.
Hyundai affiliate Kia Motors said March sales rose 23% to 98,790, buoyed by a 76% jump in exports to Europe, according to Reuters.
GM Daewoo Automotive and Technology reportedly said March exports almost trebled to 67,401 units, taking total sales to 76,857.
Reuters said exports of the small-size Kalos and Lacetti sedans to west European countries powered GM Daewoo’s sales.
But some analysts warned the news agency that soaring steel prices and a stronger won pose a threat to an industry heavily dependent on exports for earnings and added that growing inventories in the key US market may also be a sign of slowing exports.
According to Reuters, sport utility maker SsangYong Motor said sales tumbled 24% to 10,684 in March from a year ago due to a stagnant domestic demand while Renault Samsung Motors Inc. posted a 30% fall in March sales to 7,449 units.