CHRYSLER BANKRUPTCY MAY BODE ILL FOR S KOREAN AUTOMAKERS.

SEOUL, May 1 Asia Pulse - Chrysler LLC's possible collapse would impact South Korean carmakers and suppliers as it would ultimately shrink their largest export market, analysts said Friday.

After months-long negotiations with bondholders were broken off, the third-largest U.S. automaker on Thursday filed for bankruptcy protection in New York. Chrysler has said it will halt production until it is no longer bankrupt.

Should it collapse, it would deal a massive blow to General Motors Corp., the United States' biggest automaker, which has been staying afloat on government loans amid fears it too may file for Chapter 11.

"The crisis at Chrysler is profound because it could pose negative consequences to GM," said Kim Phil-soo, a professor of automotive engineering at Daelim University. "If GM also fails, the North American auto market will shrink significantly."

Chrysler's bankruptcy filing may also be a "warning signal" from the U.S. government that it will not continue to grant special treatment to GM, Kim said.

South Korean auto-parts makers, which rely heavily on the U.S. market, should also be cautious, as the collapse of one of the Detroit's Big 3 would disrupt their sales, analysts say.

In the short term, however, Hyundai Motor Co. (KSE:005380) and its affiliate Kia Motors Corp. (KSE:000270) are expected to see their sales rise in the U.S. market.