* Hyundai, Kia post overseas sales decline in March
* Pair make quarter of overseas sales in China
* China objects to South Korea's new missile system
* Sentiment towards Korean products overall is low
(Adds Kia's China sales, background)
By Hyunjoo Jin
SEOUL, April 3 South Korea's Hyundai Motor Co
and Kia Motors Corp on Monday said
"weaker sales in China" likely dragged down overseas sales in
March, when a diplomatic row over a missile system led to a rise
in anti-Korean sentiment.
At Kia Motors, China sales likely halved from the year prior
due to political tension and other reasons, a person familiar
with the matter told Reuters. Kia declined to comment.
Hyundai and sister Kia posted declines in March overseas
sales, without disclosing a country-by-country breakdown. China,
the world's biggest auto market, accounted for over a quarter of
the pair's 2016 overseas sales.
China last month reiterated its opposition to a missile
defence system that South Korea planned as a deterrent to
nuclear-armed North Korea, saying the radar was capable of
penetrating its territory. South Korean firms have since
encountered difficulties in China, such as protests, suspension
of operations and cyber crime.
"The March sales results are gloomy. The market is getting
tougher and tougher," said the person, who was not authorised to
speak publicly on the matter and so declined to be identified.
Hyundai Motor suspended production at one of its Chinese
plants from March 24 to April 4, fuelling concern that tension
over the Terminal High Altitude Area Defence (THAAD) system may
be hurting sales.
But industry officials said Hyundai and Kia have deeper,
longer-term challenges in the shape of local brands. The likes
of Geely Automobile Holdings Ltd have gained market
share with affordable sport utility vehicles, at the expense of
Hyundai and Kia which rely heavily on sedans.
Kia has also been in a dispute with over 100 of its Chinese
dealers, who said in January they might refuse to sell its cars
unless they receive 2.5 billion yuan ($363.20 million) in
compensation for losses incurred from unsold stock.
In March, Kia's overseas sales fell 13 percent to 190,601
vehicles. Last year, around 50,000 of its March sales were in
Hyundai's overseas sales fell 8 percent to 342,164 vehicles,
the lowest for March since 2013, company data showed.
Hyundai and Kia on Monday said "overseas performance last
month seems to have been impacted by weaker sales in China."
"We have seen a recent drop in dealership traffic in China
as consumer sentiment towards Korean products overall is low and
competitors are initiating special promotions targeting our
customers," they said in a joint statement.
($1 = 6.8832 Chinese yuan renminbi)
(Reporting by Hyunjoo Jin; Editing by Christopher Cushing)