(Yicai Global) March 26 -- South Korea is encouraging its automakers with a China presence to turn their attention to sports-utility vehicles and electric cars after the manufacturers' combined market share dipped to less than 4 percent in the world's largest auto market during the first two months.

South Korean carmakers need to grasp market trends and invest in new energy and smart technologies, the country's biggest news agency Yonhap quoted the Bank of Korea as saying in a report. Pollution, congestion and other reasons are causing demand for big cars in Beijing and other nearby cities to decline, but carmakers need to pay more attention to smaller cities, like Harbin and Hefei, where consumer spending power is on the rise, it added.

Korean manufacturers' presence in China has declined over the past few years from a record high of 9 percent in 2014, the report added. Auto firms from the peninsula logged their lowest market share, 2.95 percent, at the beginning of last year when China lashed out at South Korea's agreement for the United States to deploy an anti-air missile base in the country.

A decline in the status of Korea-made cars is also a factor, according to the report. Other contributors were the expansion of Japanese manufacturers and more competitive pricing from domestic brands. Sales made by Hyundai Motor Co. dived 29.4 percent on the year through January and February, while Chinese companies sold 10 to 20 times more SUVs and electric vehicles.