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UPDATE 1-Korea's Hyundai Motor targets 7 pct sales rise

(Adds shares, details)

SEOUL, Jan 29 (Reuters) - Top South Korean auto maker Hyundai Motor Co said on Wednesday it expected sales to rise more than seven percent to a record 28.2 trillion won, or $24 billion, in 2003, betting on stronger exports of high-end cars.

Racy new models, improving quality and extended warranties have helped South Korea become the fifth-largest producer of automobiles, behind the United States, Japan, Germany and France.

Hyundai, 10 percent owned by German-U.S. auto maker DaimlerChrysler AG , said it targeted an operating profit of 2.3 trillion won for 2003, but gave no comparative figure. Research firm Multex estimated 2002 operating profit of 1.75 trillion won.

Both numbers exclude sales from overseas subsidiaries. Hyundai forecast this month sales would rise 10 percent to 30.1 trillion won in 2003, including sales of cars made overseas.

Hyundai shares closed down 5.1 percent at 24,000 won, underperforming a 2.9 percent decline in the main stock index on concerns of a possible U.S.-led war against Iraq.

The South Korean automaker sold more cars in the key U.S. market last year than Japan's Mitsubishi Motors Corp and Mazda Motor Corp .

Hyundai hopes to reap benefits this year from its previous investments in upgrading and improving the quality of its automobiles, including such models as the mid-sized EF Sonata sedan and the Santa Fe sports utility vehicle.

The automaker and its affiliate Kia Motors Corp announced plans this month to boost research and development spending by almost 50 percent this year to catch up in quality with the likes of Toyota Motor Corp .