Sales by South Korean automakers shrank 3.4 percent on-year in January as the slowing economic recovery in emerging markets and competition from foreign rivals hurt overseas shipments, industry data showed Monday.

The combined sales of the five local automakers in January came to 717,332 units last month, down from 742,655 in the same month a year earlier, according to data provided by the companies. The total excludes complete knockdown kits that are assembled abroad.

The five are Hyundai Motor Co., Kia Motors Corp., GM Korea Co., Renault Samsung Motors Co. and Ssangyong Motor Co.

Their combined domestic sales grew 5 percent on-year to 111,620 units, while exports shrank 4.8 percent to 605,712 over the same period, the data showed.

"Sluggish demand from Russia and other emerging markets seems to have taken a toll on car sales mostly by Hyundai Motor and Kia Motors, the country's two largest carmakers," Ryu Yen-wha, an analyst at I'M Investment & Securities Co.

"Intensifying competition not just in the global market but also in the domestic market had also hurt their business. Armed with a weak local currency, Japanese rivals also posed a threat to local automakers," he added.

Hyundai Motor, the top automaker, sold 385,868 vehicles last month, down 6.7 percent from a year earlier, with its exports totaling 335,455, a 7.3 percent decline over the same period.

The automaker blamed fewer working days at some of its overseas factories for the decline, but worries over toughened business conditions were reflected in its bleak outlooks.

"A slowdown in growth mostly in emerging markets and deepening uncertainty caused by currency volatility will keep posing challenging business situations, with competition among carmakers likely to be further intensified," the company said in a statement.

Its domestic sales were not as bad, but they declined 2.2 percent on-year to 50,413 units. The relatively strong demand for eco-friendly models such as the Sonata hybrid helped prop up sales.

Sales by Kia Motors, a smaller affiliate of Hyundai Motor, also fell 1.8 percent to 252,774, as its robust domestic market performance was overshadowed by the lackluster overseas shipments.

Gripped by a protracted slump in overseas demand, GM Korea, the South Korean unit of U.S. automaker General Motors Co. saw its overall sales drop 3.8 percent, despite its near record-setting performance in the domestic market.

It sold 11,849 vehicles last month, up 9 percent from a year earlier, the largest January sales since January 2003 when it sold 12,515 units here. Exports remained weak, contracting 7 percent on-year to 39,736 units, apparently affected by its decision to pull its Chevrolet-badged vehicle from Europe about a year earlier.

Smaller carmakers saw their performance mostly dominated by external factors. RSM, in particular, was the only carmaker that fared well both at home and abroad.

RSM, the local unit of French automaker Renault S.A., reported a 150.6 percent gain in sales last month. Its overseas shipments also surged more than five times to 11,045 units on the back of strong demand for the Rogue crossover sport utility vehicle.

Despite robust sales on home turf thanks to the launch of the Tivoli crossover SUV, Ssangyong Motor, the smallest carmaker here and the local unit of India's Mahindra & Mahindra Ltd., saw its total January sales shrink 10.7 percent. The disappointing figure stemmed mostly from a 42.7 percent fall in exports last month.

Carmakers expect conditions to remain tough in the months to come, citing lagging emerging markets and fiercer rivalry from Japanese competitors advantaged by currency-supported price competitiveness.

"It is still too early to predict how things will turn out with just a single month of performance," said Ryu of I'M Investment & Securities. "It is, however, true that the automakers got off to a weak start this year and unfavorable business conditions will keep lingering over local automakers for the time being." (Yonhap)