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New Market Research Report: South Korea Autos Report Q1 2011

Fast Market Research recommends "South Korea Autos Report Q1 2011" from Business Monitor International, now available

 
PRLog - Jan. 5, 2011 - With the economy expected to continue its recovery, we expect that vehicle sales growth in South Korea will remain positive in 2010. In the middle of the year, we substantially revised upward our 2010 expectations for sales growth. We currently forecast that domestic vehicles sales will rise by 16% y-o-y for 2010 as a whole, to 1,618,462 units, compared with our earlier forecast of 6%. As of end-October, domestic sales of new vehicles across all categories totalled 1,195,433 units year to date, an increase of 8.7% y-o-y. This 10-month cumulative figure may imply some slight downward risk to our 16% forecast increase in annual sales, however, it is clear that 2010 will still be a very positive year for new vehicle sales within South Korea.

Our Macroeconomic team predicts that South Korea's economy will continue to recover strongly during the remainder of the year. From near stagnation in 2009, the economy will grow in real terms by 5.5% this year. The Bank of Korea noted in June that consumption - the bedrock of auto sales - is a particularly strong driver of the current economic upturn. The recovery in consumer demand should remain a pivotal factor in the wider economy's recovery - our Macroeconomic Desk predicts that private consumption will contribute 1.7 percentage points (pp) to our headline 5.5% real GDP growth forecast in 2010. The continued growth in domestic sales will, in turn, support production, which we predict will rise by nearly 17%, to 4.09mn vehicles, in 2010. Vehicle production for the first 10 months of the year reached nearly 3.49mn units, according to the Korea Automobile Manufacturers Association (KAMA).

In November 2010, Bloomberg reported that combined sales of Hyundai Motors and Kia Motors vehicles had surpassed those of Japanese global leader Toyota Motor within Europe over the first 10 months of the year. According to data released by the European Automobile Manufacturers Association, combined sales for Hyundai/Kia stood at 521,269 units, up 4% y-o-y. However, Toyota, which has been badly affected by bad publicity surrounding numerous recalls of many of its own products, saw sales fall by 17% y-o-y across Europe, to 511,754 units. This leaves Hyundai/Kia with market share of 4.5% in Europe (up 0.4 pp y-o-y), compared with 4.4% (down 0 6 pp y-o-y) for Toyota.

According to industry analysts, it has not solely been a case of Hyundai/Kia benefitting from Toyota's problems. Rather, the companies have also been aggressively luring European customers via the launch of new sports utility vehicle (SUV) and compact models aimed at the European market. Both carmakers also offer impressive warranty and after-sales packages, with Kia now offering a seven-year warranty on its products in most European markets and Hyundai offering a 'Five Year Triple Care' scheme, which provides unlimited warranty, roadside assistance and vehicle checks for five years.

Even before this recent announcements, the carmakers had both announced strong H110 results earlier in the year. Hyundai experienced a significant rise in both net profit and operating profit in H110, with the former rising to KRW2.517trn (up from KRW1.037trn in H109) and the latter increasing to KRW1.566trn (from KRW811bn in H109). This was predicated on a strong sales performance, with revenues in the first half of the year totalling KRW17.978trn (54% of the target for the full calendar year). In the second quarter of 2010, Kia registered a net profit of KRW557.8bn (US$471mn), up 61% from KRW347.1bn in the same period of the previous year. This was on the basis of sales of KRW5.77trn, a rise of 23% y-o-y from the KRW4.68trn registered in Q209. The outlook for profitability during the remainder of 2010 is reasonably good, despite an anticipated slowing of economic growth in two key markets (the US and China). Our Macroeconomic Team forecasts that real GDP growth in the US (which received around 420,000 exported cars from South Korea in 2009) will slow to 1.0-1.5% in H210, from an annualised 2.4% q-o-q in Q210, while China is forecast to experience a slowdown to growth of 9.0% for 2010 as a whole, from 11.9% in 2009. However, even at this lower level, China's rate of growth is still very strong. Meanwhile, Hyundai's and Kia's competitive pricing should mean that US consumers continue to view their propositions as attractive. Finally, the strong recovery in economic growth in the domestic market will clearly support car sales by these carmakers in South Korea.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/106429_south_korea_autos_repor...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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