A report predicts that imported cars will take up as much as 40 percent of the domestic market for full-sized sedans in less than 10 years.

The report forecast imports of cars would account for a 17.2 percent share in the local market this year, 29.7 percent in 2006 and 37 percent in 2008.

It predicted local sales of imported vehicles would grow to a total of 45,000 units in 2005 and 75,000 in 2007 to break the 100,000-unit mark by 2009.

Imported car sales posted a total of 19,461 units in 2003, an increase of 20.7 percent from the previous year.

The institute also cited heightened demand among the high-income sector, increased public acceptance of imported cars and a wider selection among imports as reasons for the rising sales, .

The South Korean and Japanese governments have already begun talks for a possible bilateral free trade agreement (FTA) that seeks in part to scrap Korea's 8-percent tariff on Japanese cars, which would result in a 9.2 percent discount in prices for the cars - further reducing the price gap between local and Japanese automobiles.

The figures are markedly higher than an earlier estimate provided by the Korea Automobile Importers and Distributors Association, which forecast 46,000 imported cars would be sold locally in 2008.