SOUTH KOREA: Automakers see global market contraction

By just-auto.com editorial team | 22 December 2008

The global automotive market would contract 4.3% in 2009 as the economic crisis spreads to emerging markets, the Korea Automobile Manufacturers Association has said.

The group said in a report cited by the Korea Herald that Latin American markets would contract due to the United States' economic slowdown and that car sales in the region would fall 10.8%. The eastern European market will shrink by 6.2% year on year.

The KAMA report said that the mature markets of the United States and western Europe would also continue to decline and projected a decrease of 4.5% for the US market, the largest export destination for local carmakers, and a 4.8% decline for the western European market.

Along with the global market contraction, local carmakers' exports will suffer a 5.6% setback while the value of Korea's automotive exports, including parts, will be cut by 7.4% to $46.5 billion, the report said.

For the domestic market, the KAMA report painted a bleaker picture. Next year, the local market is likely to shrink by 8.7% from this year to come in at about 1.05m units.

The report said that although the financial markets across the world would regain some stability, rising household debt and falling consumer confidence would stunt domestic automobile sales next year. The report added that the scheduled tax increase for passenger vehicles built for seven to 10 people and imported brands' increasing market share will also act to reduce local firms' domestic sales next year.

However, the report projected that city car sales would continue to rise next year to about 136,000 units, 0.2% higher than this year, and that the segment's market share would rise to 15.5% from the 14.2% recorded this year.

KAMA estimated that this year's market would have shrunk 5.7% from last year and that this year's automobile sales would be about 1.15m units.

The report said that the economic slowdown would leave a bigger mark on commercial vehicle sales than it would on the passenger car market. According to the association's estimates, the country's commercial vehicle market would have contracted by 16.3% while passenger vehicle sales would decline by only 3.2% from last year.

By segment, all but the city car segment took a setback this year. City car sales rose 152.1% from last year while SUV and compact car sales respectively fell 21% and 13.5%. Mid-sized vehicle sales would drop by 3% and large car sales will decline by 2.8%, the report said.

Overall, KAMA expects Kia Motors' annual sales to increase by 14.4%, pushing up the company's domestic market share to 27.1% from last year's 22.3%.

All others are expected to see their domestic market share decline. According to the report, Hyundai Motor's market share will decline to 49.7% from last year's 51.3% while GM Daewoo's share will fall by 0.4%age points to 10.3%. The market shares of the country's two smallest carmakers - Renault Samsung Motors and Ssangyong Motor - will respectively be cut by 0.9 percentage points and 1.6 percentage points, to 8.7% and 3.4%.