INCHEON, South Korea – In the upscale suburb of Songdo Beach, three large car dealerships situated on the main street near the super-luxury Ramada Songdo hotel tell the story of how the global economic crisis is taking its toll on Korea’s domestic auto industry.

Up to now, the three competitors have operated successful large-scale stores. But if their declining sales of late are typical of fellow dealers, the country’s industry is in worse shape than domestic auto makers’ official October sales reports would indicate.

With sales plunging 50% from prior-year for two of the dealerships, and 30% for the other, it won’t be long before Korea’s overall market feels the pain.

The three dealerships are owned by Ford Motor Co., GM Daewoo Auto & Technology Co. and Hyundai Motor Co. Ltd. The first two, located side-by-side, say sales are down drastically. The third, located just a hundred yards down the thoroughfare, is starting to see deliveries decline.

Yong-hee Park, president of Song-do Daewoo Motor Sales, says the trouble began with the U.S. mortgage crisis, which frightened Korea’s car buyers, banks and credit outlets. Car loans now are difficult to obtain.

“Consumer sentiment is very low here because of what people see on TV and read about the financial crisis, which is said to be global,” he says. “So they are waiting and watching.

“We have a special problem at GM Daewoo because Koreans believe General Motors (Corp.) is in a financial crisis and could go bankrupt. This negative attitude is seriously impacting the launch of the new Lacetti Premiere…because they believe they will have severe service problems if they purchase a GM Daewoo car.”

Park says his dealership saw deliveries drop 10% in September, when news of the financial crisis first surfaced and began to worry customers. Sales continued to fall 20% in October and 50% in November, compared with year-ago.

“If you plot this on a graph, you see a very sharp decline beginning in September and October, and we believe the descent will continue on the same sharp angle. It will continue into next year.”

October domestic sales reported by GM Daewoo show sales declined 9.53% to 8,389 units, a far cry from the 50% drop realized by Park’s dealership. He says his store sold 500 vehicles last year and this year hopes to deliver 350 units. The Matiz minicar is the current best-seller.

Sunin Motor Co. Ford-Lincoln Sales Advisor and Manager Sung-chul Seo echoes Park’s concerns. “October was a nightmare,” he says. “We were down by 50% after being down 30% in September. It all began in September, because August sales were normal.”

Ford Korea reported an October sales decline of 5.36%, with 229 vehicles sold nationwide. That followed a reported September drop of 4.6%, when 252 vehicles were delivered, which is significantly different from Seo’s losses.

As with its nearby competitors, the Ford-Lincoln dealership operates seven days a week. Seo also sells cars on his website, but not this month.

“Through the first half of November, I, myself, have not sold a single car,” he says. “Normally, we sell about 220 units in a year, but we are down considerably.”

Surprisingly, customers still are interested in high-priced models, such as the Lincoln MKX, priced at 54,900,000 won ($39,052) and cross/utility vehicles such as the Ford Escape, which sells at 33,400,000 won ($23,759).

“There is much interest in the MKX,” Seo says. “But the banks and credit-card companies won’t advance (customers) the money.”

Seo complains competitors have a wider price range for their models, and customers are able to order a car with whatever optional equipment they desire. They also are able to take advantage of a wide range of incentives.

However, his Ford dealership only offers models with a fixed set of options, and the prices are firm and cannot be reduced or negotiated. The Ford Taurus is the current best-seller.

Down the street, Hyundai Song-do dealership is not yet experiencing a severe impact from the global financial crisis, but sales are beginning to drop off.

Sales Manager Hye-ja Sim says she saw no impact in October. The dealership sold 72 units, meeting its goals. Hyundai reported its domestic sales in October were down 4.5%, with 52,735 units sold.

However, the impact of the credit crunch is beginning to affect Sim’s November sales, although the shortfall is less than at the Ford and GM Daewoo stores.

“We have sold 24 vehicles through the first 14 days of November,” she says. “Because of commitments from customers who have good credit, I am confident that we will sell at least 53 cars and SUVs during the full month.”

While that constitutes a drop of about 26% from the dealership’s October level, Sim believes her store will continue to outperform the competition. The Sante Fe CUV was among the two best-selling models in October.

The Hyundai-Kia Automotive Group has a considerable advantage in owning its own financing unit and having ample liquidity. Customers still can get 1-and 2-year financing at 8.25% and 36 months at 8.75%, she says.

This month, Hyundai is offering a wide range of discounts to try to clear backlogs of most models, having produced at a bullish rate in anticipation of strong sales growth in domestic and export markets.