UPDATE 2-S.Korea Dec car sales down; won to help exports

(Adds GM Daewoo's further production cut in 7th para)

By Cheon Jong-woo

SEOUL, Jan 2 (Reuters) - Combined sales of South Korean automakers, led by Hyundai Motor (005380.KS), fell 13 percent in December, adding to concerns over the ripples of a spreading global recession on demand for cars.

But Hyundai and its sister firm Kia Motors (000270.KS) are better positioned than global rivals such as Toyota Motors Corp (7203.T) to deal with the downturn thanks to a weaker won currency and appetite for smaller cars.

The drop in sales came as automakers around the world face their worst business environment in recent memory, caught in a sharp reversal of demand as the financial crisis spread, squeezing credit and denting consumer confidence.

"As the downturn and financial crisis have cut people's incomes and boosted uncertainties about the future, more people are postponing purchases of durable goods such as cars," said Song Sang-hoon, an auto analyst at Kyobo Securities.

"Despite weakening sales, global automakers have too much capacity and the industry needs restructuring," he added.

Many global carmakers, including South Korean companies, have already cut production to cope with the worsening environment.

GM Daewoo Automotive and Technology Co, the South Korean unit of General Motors Corp (GM.N), has decided to suspend production of some lines, including one for a mid-sized sedan, due to weakening demand, a company official said Friday.

Some carmakers have sought government help to survive. Last month, the U.S. government agreed to a massive emergency loan package for Detroit's Big Three automakers to prevent potential bankruptcies.

In Korea, Ssangyong Motor Co (003620.KS) and its majority shareholder China's SAIC Motor Corp (600104.SS) are seeking support from the South Korean government and banks for Ssangyong.

South Korea's five auto makers sold a combined 406,060 vehicles in December, compared with 467,105 a year earlier, according to the companies.

Their overseas sales fell 9.8 percent to 319,123 units from a year ago and domestic sales slid 23.2 percent to 86,937.

For a graphic on December sales, click:

here

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