"Carmakers will benefit from lower interest rates, which reduce their financial burden," said Hwang-chan, analyst at Dongwon Economic Research Institute.

The three-year corporate bond yield closed at 8.79 per cent on Friday, down from around 30 per cent in January 1998.

But analysts questioned ambitious sales plans announced by Korean carmakers.

"The sales outlook still appears bleak," said Oh Chang-suk,analyst at Daishin Economic Research Institute. "Carmakers can produce as many as they want. But how many they can sell is an entirely different issue.

Exports looked dismal because of the won's strength againstthe dollar and uncertainty in emerging markets, analysts said.

The won-dollar rate was about 1,400 won on average in 1998, but was expected to move between 1,150 and 1,250 in1999.

Korea's largest carmaker, Hyundai Motor, said its sales this year would rise 26 per cent to 1.12 million units.

"We expect substantial profits this year. We plan to introduce many new models," said Hyundai Motor spokesman Min Kyung-hwan.

Hyundai Motor reported 1998 losses of 33.2 billion won ($28 million) on sales of 8.70 trillion won, against net profits of 46.5 billion won on sales of 11.66 trillion won in 1997.

Hyundai projected this year's turnover would reach 13.6 trillion won but declined to give profit estimates.

Analysts forecast Hyundai's 1999 profits at 50 billion won.

Hyundai set its export target at 680,000 units in 1999, up from 572.090 units in 1998, and domestic sales were set at 435,000 units, against 307,976 units.

Hyundai's shareholder meeting is set for February 26.

Daewoo Motor Co Ltd, an unlisted unit of the Daewoo Group, said its vehicle sales in 1999 would rise to 1.3 million units from 893,295 units in 1998.

Daewoo set its export target at 900,000 units against658,959 units in 1998, and its domestic sales target at 400,000 units against 234,336 units.

"Along with the economic recovery and some tax incentives, car sales will certainly rise," said a Daewoo spokesman.

Kia Motors Corp, whose management will soon betaken over by Hyundai Motor, said its sales in 1999 would jump to 800,000 units against 467,545 units in 1998.

Kia wants to export 500,000 units this year against 305,605 units in 1998, and sell 300,000 units domestically, against 161,940 units.

Kia has not yet scheduled its shareholders' meeting.

Analysts said forecasting the 1999 performance of Daewoo and Kia would be difficult because both companies were involved in mergers and acquisitions.

Daewoo agreed in principle to take over the debt-stricken Samsung Motors Inc and it was not clear how Hyundai would clean up Kia's books after its scheduled acquisition in March.

The Korea Automobile Manufacturers Association (KAMA) said vehicle sales would rise to 2.35 million units in 1999, from anestimated 2.14 million last year.

"Market conditions are improving, but not fast enough to digest carmakers' planned sales," said a KAMA researcher.

He said lower taxes on new vehicles and the end of punitive taxes on owners of more than two cars would boost car sales.