* Hyundai global sales up 8 pct last month; Kia up 21 pct
* U.S. recovery helps South Korean auto exports
* Japanese automakers ride surge in sales at home
By Hyunjoo Jin and Chang-Ran Kim
SEOUL/TOKYO, June 1 Automakers in Japan and
South Korea continued to post solid gains in sales in May with
Hyundai Motor and Kia Motors benefiting
from the sustained recovery of the U.S. market while Japanese
domestic sales were supported by government incentives for
Auto sales are among the earliest indicators of demand in
global economies and U.S. auto sales have proven to be a bright
spot while negative headlines from euro zone countries dims the
Hyundai's global sales rose 8 percent and Kia's sales jumped
21 percent in May from a year earlier, driven mainly by overseas
Hyundai and Kia have gained market share in the United
States, Europe and other key markets since the global financial
crisis by offering stylish cars at competitive prices. They have
also been helped by the cheaper South Korean currency and South
Korea's free trade deals with Europe and the United States.
South Korea's exports of automobiles, which also include
Europe-bound Chevrolet cars made by General Motors' South
Korean unit, rose 4 percent in value terms in May from a year
earlier, thanks to the recovery of the U.S. market, according to
government data released on Friday. In contrast, overall exports
dipped 0.4 percent in Asia's fourth-biggest economy last month.
Shares in Hyundai closed down 2.5 percent and Kia shares
dropped 1 percent in a wider market that fell 0.5
percent following disappointing Chinese factory activity data
released on Friday.
China's factory activity data fell more than expected in May
to its weakest reading this year, highlighting concerns the
worsening euro zone debt crisis will further undermine global
JAPAN FIGHTS BACK
In Japan, car sales soared 66 percent in May to 394,950
vehicles, rebounding from a trough in the months following the
earthquake and tsunami a year earlier when carmakers slashed
production due to a disruption in the supply chain.
Demand for new vehicles has also been supported by the
government's subsidies on fuel-efficient cars, designed to keep
domestic factories humming as the strong yen forces automakers
to reduce loss-making exports.
Excluding 660cc minivehicles - a segment unique to Japan -
sales of new cars, trucks and buses also rose by two-thirds,
driven by hybrids such as Toyota Motor Corp's Prius and
Honda Motor Co's gasoline-electric Fit.
That marked the biggest rise on record for the month of May,
but an official at the Japan Automobile Dealers Association said
there was little room for optimism.
"The sales volume itself was low and only barely exceeded
the tally from two years ago," said Michiro Saito, a manager at
the dealer association. "We can't call this a real recovery and
the outlook is uncertain."
Non-mini vehicle sales totaled 236,366 in May, compared with
228,514 vehicles two years ago. Toyota's sales more than
doubled, while Honda's grew 48 percent. Nissan Motor Co
, which recovered its supply chain faster last year,
posted a 17 percent rise in non-minivehicle sales.
Without the help of government tax incentives, the Japanese
car market has been trending downwards due to urbanisation, a
declining population and the loss of interest in owning cars
among young people.
THREATS TO HYUNDAI, KIA
The revival of Japanese rivals and limited production
capacity of South Korean carmakers threaten to slow the growth
of Hyundai and Kia.
Industry research firm TrueCar.com expects U.S. light
vehicle sales to be up 32 percent in May to the highest level in
five years, helped by pent-up demand and as the Japanese
automakers bounce back from last year's earthquake-related
Hyundai and Kia, which rank fifth in global car sales, and
U.S. carmakers General Motors and Ford, lost market share
in May in the U.S. market as Toyota and Honda were set to post
U.S. market share gains, according to TrueCar.com.
"The U.S. market is recovering fast, but Hyundai, Kia are
falling short of catching up with market demand, although they
are running plants at full capacity," Dongbu Securities analyst
Yim Eun-young said.