(Adds details, shares)
SEOUL, Jan 21 (Reuters) - South Korea's largest auto maker Hyundai Motor Co and its affiliate Kia Motors Corp said on Tuesday they would boost research and development spending by almost 50 percent this year to catch up in quality with the likes of Toyota.
Hyundai and Kia plan to spend a combined 2.25 trillion won ($1.92 billion) on research and development in 2003, a 49 percent rise from a year ago.
"Every year, we plan to develop four to five new models while raising quality levels to that of Toyota by 2005," Hyundai said in a statement.
Once viewed as a maker of tinny vehicles, Hyundai, 10 percent owned by U.S.-German auto maker DaimlerChrysler AG , has invested heavily in upgrading and improving the reliability of its cars, with models such as the mid-sized Sonata sedan and Santa Fe sports utility vehicle (SUV) gaining popularity in the key U.S. market.
The South Korean automaker ranked above Japanese auto makers Mitsubishi Motors Corp , Mazda Motor Corp , Subaru (Fuji Heavy Industries ) and Suzuki Motor Corp in terms of U.S. sales last year. It ranked seventh below Toyota Motor Corp , Honda Motor Co and Nissan Motor Co .
Hyundai shares ended unchanged on Tuesday at 26,500 won, while Kia shares closed down 1.6 percent at 8,010 won. Both shares have fluctuated in recent trading on strong sales forecasts and concerns that a strong South Korean won would make Hyundai and Kia cars more expensive overseas as oil prices rise.
But both auto makers were bullish about 2003 sales, despite tough competition in the U.S. market with a relentless price war fueled by General Motors Corp's aggressive discounting to try to boost its U.S. market share.
Expecting to overcome weak domestic demand with increased exports of high-end cars, Hyundai said earlier this month it would drive sales up 10 percent to a record 30.1 trillion won in 2003, fueled largely by exports. The figures include car sales made overseas.
Kia's sales are expected to rise to 16.7 trillion won this year from an estimated 14.2 trillion won last year. ($1=1174.2 won)