Auto exports expected to log solid gains in H2

Korea’s auto exports are likely to post a solid increase in the second half of this year despite unfavorable overseas market conditions, industry officials said Thursday.

Domestic demand is expected to remain weak for the rest of the year, but exports should continue to do well, carmakers, auto parts companies and local automobile industry associations said in a meeting hosted by the Ministry of Knowledge Economy.

“Eurozone fiscal woes and a slowdown in growth in China and the United States have affected demand, but overall conditions are not too bad,” an industry source said.

The Korea Automobile Manufacturers Association said outbound shipments may gain 4.7 percent on-year to reach 3.3 million units for all of 2012, up from an earlier prediction of 3.2 million.

The Korea Automotive Research Institute, a think tank for Hyundai Motor Group, said exports may rise to 3.38 million, for a gain of 7.3 percent from the year before, thanks mainly to improvements in brand recognition and quality.

The upbeat forecasts come as exports of South Korean-made cars jumped 10.4 percent on-year in the first half to 1.7 million units.

The auto industry has been lauded as having played a major role in sustaining the country’s export momentum in the face of worldwide economic uncertainties.

Both KAMA and KARI, however, said domestic sales will fall shy of expectations as high fuel prices, soaring household debt and rising consumer concerns about the economy force people to limit spending.

The association said sales of cars in South Korea will fall 3.7 percent to 1.59 million units from 1.64 million predicted at the start of the year, with the automotive institute forecasting sales to reach 1.55 million vehicles, down 1.9 percent compared to an earlier target of 1.58 million.

Auto parts companies said free trade agreements with the European Union and the United States are exerting positive influence on sales, although sluggish market conditions in China, the world’s single largest car market, is weighing down growth.

Company executives, meanwhile, said that there is a need to resolve tensions in labor-management relations that could derail the current momentum. Workers at carmakers and auto parts companies have been asking for sizable wage hikes and improved benefits.

Executives of Hyundai Motor Co. and Kia Motors Corp., South Korea’s two largest carmakers, were present at the meeting, along with heads of automotive parts companies such as E-won Solutech and Semyung Industrial Co. (Yonhap News)