Boston, MA -- (SBWIRE) -- 04/16/2014 -- Sales

According to the Korea Automobile Manufacturers Association (KAMA), vehicle sales in 2013 contracted 1.9%, to 1,383,358 units. This was in line with our bearish outlook on the market, given that we too were forecasting sales to contract 1.2%, to 1.39mn units.

However, sales in January 2014 are enjoying an uptick, rising 2.1% year-on-year (y-o-y), to 107,510 units. This was the first positive growth in four months.

After contracting for the past two years, we forecast auto sales to grow 1.9% in 2014, to 1.41mn units. We expect the positive start to 2014 to continue in the near term as economic activity begins to show incipient signs of a pick-up.

Production

Auto production declined slightly in 2013, to 4,521,429 units, a decrease of 1.2%. This came in slightly above our forecast for 4.43mn units, due to the resilience in commercial vehicle (CV) production, which enjoyed a gain of 2.1%, to 398,825 units. However, vehicle production suffered a sharp collapse in January 2014, tumbling 10.3% y-o-y, to 368,243 units. We are not reading too much into January's print as this year's Lunar New Year holiday affected the total number of production days.

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We forecast auto production to grow 1.9% in 2014, to 4.6mn units. Besides the small growth in domestic sales, the major factor supporting the growth in output is a more positive export story for 2014. In our opinion, the rise in vehicle demand globally, as well as further tariff cuts under the Korea-EU FTA, will see stronger external demand for Korean cars.

Imported Vehicle Sales To Remain Strong

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