Car sales returning to pre-crisis level

Industry

Published: 09 Mar. 2010, 21:48

Car sales returning to pre-crisis level

In a sign that local wounds caused by the global economic crisis have begun healing, sales by Korean carmakers have nearly returned to a pre-crisis level, according to market data released yesterday,

The Korea Automobile Manufacturers Association said in a monthly combined performance report that local carmakers sold 106,522 vehicles in Korea last month, up 21.2 percent from the same month a year earlier.

The figure was even above the 92,131 domestic sales in February 2008, months before the full financial crisis surfaced.

Association data showed that the exports of local cars in February 2010 also increased 13.3 percent from February 2009 to 171,746. Those sales were only down 18,576 from the number shipped out in February 2008.

Combining domestic sales and exports, local carmakers sold a total of 278,268 cars last month, only 4,185 fewer than those sold in the same month two years ago.

“It would be still too early to say that the local auto industry has fully recovered, but it has come very close to that,” said an association official.

The association said last month’s performance, the second in a row showing on-year growth, was impressive more because it came after the end of a tax break for purchasing cars.

The tax breaks for drivers replacing aging gas guzzlers with more energy-efficient vehicles, which helped local carmakers weather the economic crisis, expired in December. But January still saw on-year sales growth of nearly 40 percent.

Suh Sung-moon, an auto industry analyst with Korea Investment and Securities, said it was a better-than-expected performance and predicted that the trend would continue in the coming months.

“The continual release of new cars and the expectation that the local economy will grow 4 to 5 percent this year appear to be boosting local car sales,” said Suh. He said the Korean currency, whose weakness against the dollar lifted car exports last year, is also not gaining strength at a worrisome pace.

Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade, said the pace at which the local car industry grows is not as dazzling as the ones for its Chinese and Indian counterparts, but is as brisk as the growth in the U.S. auto industry.

But he said a possible rise in the borrowing rates and oil prices could slow car sales in Korea.

“A March figure would tell more clearly whether or not we are on a sustainable road to recovery,” said Lee.

By Moon Gwang-lip [joe@joongang.co.kr]

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