Industry officials in Korea have said there are signs that the tax cut for cars that took effect on May 1 is stimulating market demand.

The Korea Herald reported that the individual consumption, acquisition and registration taxes for new vehicles bought to replace automobiles registered before December 31, 1999 have been reduced by 70% from May 1 until the end of the year.

According to industry officials, daily sales shot up on Monday and Wednesday when showrooms opened for business after the three-day weekend and May 5 Children's Day.

"We don't have the figures for the whole country but the number of people visiting and buying vehicles at some of our main showrooms has doubled in comparison to other months," a Hyundai Kia official told the newspaper.

Other automakers also report that sales are up in the first week of the month.

In addition to the tax cut, carmakers are offering additional discounts for people replacing old vehicles, the report added.