Shares of Hyundai Motor and its affiliate Kia Motors rose Monday morning after the government offered tax breaks to stimulate auto sales at home.
The Ministry of Strategy and Finance said Sunday that it will cut taxes, which would bring down the price of a new car by as much as 2.5 million won ($1,863), for people who buy the new car to replace their old one, according to Yonhap News Agency.
Hyundai Motor, South Korea's top carmaker, gained 3.71 percent to 67,100 won at one point in early morning trading, and Kia was up 5.26 percent to 10,200 won.
"The tax incentive is good news for local automakers," Suh Sung-moon, an analyst at Korea Investment & Securities, was quoted as saying.
The government's stimulus plan for the auto industry prompted Suh to raise Hyundai's domestic sales forecast to 580,000 units this year from his original prediction of 530,000 vehicles.
The plan would also help Kia sell a total of 357,000 cars in South Korea, compared with a previous forecast of 327,000 units, Suh said.
The incentive will be offered from May to December this year, according to the ministry.