PREVIEW-Hyundai Q1 profit seen halving on weak sales

* What: Hyundai Motor, Kia Motors Q1 earnings

* When: Hyundai (Thursday), Kia (Friday)

* Weaker sales hit Hyundai; won helping Kia

* Softer won, govt steps to help both combat slump

* But recent won firming casts shadow on outlook

By Cheon Jong-woo

SEOUL, April 20 (Reuters) - Hyundai Motor Co (005380.KS), South Korea's top automaker, is set to post a nearly 50 percent drop in first-quarter profit as the global recession cripples car sales, and the outlook remains uncertain.

Its affiliate Kia Motors Corp (000270.KS) should, however, to swing to a net profit thanks to a softer won KRW= and higher local sales driven by new models.

Hyundai and Kia, together the world's No.5 automaker, are expected to gain in the months ahead from weakness in the local currency and South Korea's steps to boost domestic car sales, but neither will be immune to the industry's worst-ever downturn.

"First-quarter earnings are likely to disappoint, but profits will still look great compared with competitors' massive losses," said Nam Kyung-moon, autos analyst at Meritz Securities.

"If the won and the yen remain around current levels, Hyundai and Kia will be able to maintain a level of competitiveness Japanese car makers couldn't even dream of."

Hyundai is expected to post a 205 billion won ($152 million) net profit for January-March, according to a Reuters poll of 11 analysts, versus 392.7 billion won a year ago and 243.5 billion won in the fourth quarter of last year.

The maker of the Sonata sedan is set to report January-March operating profit of 206.4 billion won, less than half the 529.1 billion won it posted a year ago.

Quarterly sales are seen falling more than 22 percent to 6.38 trillion won.

WON, GOVT MEASURES BRIGHTEN OUTLOOK

The won JPYKRW=R dropped over 30 percent against the dollar and almost 40 percent versus the yen in January-March from last year, boosting South Korean carmakers' price competitiveness in overseas markets against Japanese rivals such as Toyota Motor Corp (7203.T).

The won's weakness probably allowed Kia to post a 38.8 billion won net profit in the quarter from a net loss of 24.8 billion won a year ago, according to the Reuters poll.

Government support measures are likely to help Hyundai and Kia remain profitable for the rest of the year, analysts said.

The government plans to lower purchasing and registration taxes by 70 percent in May-December to customers who replace their old cars with new ones.

Hyundai is expected to post flat full-year net profit of 1.42 trillion won, in contrast to major rivals' big forecast losses.

Hyundai shares rose 40 percent in January-March, beating the wider market's .KS11 13 percent gain, but a recent won recovery clouds the outlook for South Korean carmakers, analysts said.

"With the credit crunch easing, the won will inevitably rise, and the yen will fall. That will allow Japanese makers to aggressively attack Hyundai and Kia," said Choi Dae-sik, analyst at HI Investment & Securities. ($1 = 1344.1 Won) (Editing by Jonathan Hopfner and Anshuman Daga)