SEOUL  - South Korea's top automakers Hyundai Motor and Kia Motors have been cutting production overseas as a global credit crunch that has savaged the U.S. auto industry lays into Asian car and parts makers.

Japan's No.2 car maker Honda Motor Co was also reported to be scaling back overseas expansion plans, freezing a project to boost capacity in Turkey and delaying a second plant in India.

The global auto industry has been hammered by a sharp drop in demand, particularly in the United States where Ford Motor Co , General Motors Corp and Chrysler LLC are seeking $34 billion in loans and credit lines from the government.

"This is a survival game. It's not just carmakers; companies across all sectors cannot help but cut output in the current situation," said Choi Dae-sik, an analyst at HI Securities. "If the problem remains until the first half of next year, it could be the worst period for the auto industry."

Shares of car parts maker Hyundai Mobis, an affiliate of Hyundai Motor and its biggest supplier, slid more than 9 percent in Seoul on Wednesday, while steelmaker and auto industry supplier POSCO fell 2.8 percent. Seoul's broader share index was down 0.7 percent.

Hyundai Motor lost 4.8 percent, and Kia 2.6 percent.

In Tokyo, Keihin Corp, a parts supplier to Honda, was down 0.9 percent after UBS lowered its price target and profit forecasts.

U.S. WOES

U.S. auto sales slumped nearly 37 percent in November to their lowest since 1982, and major automakers said there was no sign that demand in the world's largest vehicle market would rebound in the next six months.

Spokesman Jake Jang said Hyundai had cut output at all its overseas production lines except a new Czech factory. He gave no further details. Hyundai only started test production at the Czech plant early last month.

Hyundai, the world's No.5 car maker with affiliate Kia, currently runs overseas production lines in the United States, China, Turkey, India and the Czech Republic.

Hyundai posted a 40 percent drop in U.S. November car sales versus a year ago, while Kia's U.S. sales fell 37 percent.

Jang said Hyundai had cut its U.S. annual production target to 245,000 units from 260,000 units.

Hyundai has this month stopped overtime work at all its local plants except one that makes compact sedans such as the Elantra. Analysts say the overtime ban would trim monthly output by around 20,000 cars.

A Kia official said the car maker had been adjusting production volumes at plants in China and Slovakia since late October, but declined to give further details.

"It's silly to maintain full capacity given the current tough situation," he told Reuters, asking not to be identified.

Hyundai to cut production

SEOUL (Reuters) - HYUNDAI Motor Co , South Korea's top automaker, said on Wednesday it launched output cuts in most of its factories abroad due to falling sales as a global recession has hit auto demand in the world.

'We entered reduction in output of all overseas lines except the new Czech Republic factory,' said company spokesman Jake Jang said by telephone, without providing details.

Hyundai started test production at the Czech plant in early November.

Hyundai, the world's No.5 car maker along with its affiliate Kia Motors Corp , currently runs overseas production lines in the United States, China, Turkey, India and the Czech Republic.

Hyundai posted a 40 per cent drop versus a month ago in the US car sales in November, and its affiliate Kia Motor Corp fell 37 per cent.

'(We) slashed the US annual production target to 245,000 units from 260,000 units' said Jang, adding the decision was made a month ago.

Hyundai has this month stopped overtime work at all local production lines except one for compact sedans such as the Elantra.

Analysts say the overtime ban should cut Hyundai production volumes by about 20,000 units a month.