Shares of Hyundai Motor and affiliate Kia Motors rose after the government offered tax breaks to stimulate domestic vehicle sales.

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Korea’s ministry of strategy and finance said on Sunday it would cut taxes to bring down the price of a new car by as much as KRW2.5m (US$1,863), for people who buy the new car to replace their old one, the Korea Herald said, citing the official Yonhap News Agency.


“The tax incentive is good news for local automakers,” Korea Investment & Securities analyst Suh Sung-moon was quoted as saying.


The government’s stimulus plan for the auto industry prompted Suh to raise Hyundai’s domestic sales forecast to 580,000 units this year from his original prediction of 530,000 vehicles.


The plan would also help Kia sell a total of 357,000 cars in South Korea, compared with a previous forecast of 327,000 units, Suh said.

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The incentive will be offered from May to December this year, the report added, citing the ministry.