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Local Automakers’ Sales Drop 5.2% in July with Tax Cut Ending
Tax Effect?
Local Automakers’ Sales Drop 5.2% in July with Tax Cut Ending
  • By Jung Min-hee
  • August 3, 2016, 02:15
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Even the sales of SSangtong Motor’s Tivoli, the best-selling model, fell down 22.8 percent in July from the previous month.
Even the sales of SSangtong Motor’s Tivoli, the best-selling model, fell down 22.8 percent in July from the previous month.

 

The July auto sales in South Korea fell, though the figures marked an all-time high in the first half of the year. Market watchers also take a dimmer view of sales in the second half since automakers face many problems to solve, including strike, wage negotiation, owner risk as well as the end of the special consumption tax benefit for car purchases.

According to industry sources on August 1, five automakers – Hyundai Motor Co., Kia Motors Corp., GM Korea, Renault Samsung Motors Co. and Ssangyong Motor Co – sold 645,524 cars in July, down 5.2 percent from a year earlier.

In particular, five automakers saw the plunge in car sales as the special consumption tax benefit for car purchases ended in late June, the number of working days decreased due to the increase in holidays and some strikes caused lost production. These firms sold a total of 121,144 cars in July in Korea, showing the decrease of 10.6 percent on year.

The country’s largest automaker Hyundai Motor sold 47,879 vehicles in July, falling by 20.1 percent from a year ago. Its sister Kia Motors also saw its July sales drop by 8.7 percent on year to 44,007 cars.

The sales of GM Korea in July increased by 15.8 percent to 14,360 cars compared to the same month last year. However, the figure is decreased by 20.5 percent from the previous month.

Renault Samsung Motor also posted a jump of 9.7 percent in sales here in July compared to the same month last year, but the figure fell by 31.8 percent from the previous month. Ssangyong Motor sold 4,409 units of the Tivoli, the best-selling model, down 22.8 percent from the previous month. The automaker also recorded sales dropped by 8.1 percent on year as it saw the decrease in sales of all models. 

Industry sources expects that automakers will keep struggling with performance deterioration. This is because the amount of working days and factory operation days will decrease due to summer holidays in August, and the companies haven’t completed wage negotiations this year, except for Ssangyong Motor, which can lead to business environment risks, including conflicts between management and labor union after holidays.

Hyundai Motor, which has had strikes for five years in a row, will be unlikely to reach the agreement as there is a huge difference of opinion between management and labor. Renault Samsung Motor will not be able to avoid owner risks since President Park Dong-hoon, a former Volkswagen Korea CEO, was summoned for questioning on his alleged involvement in the company's cheat on emissions tests. Kia Motors will receive a ruling for ordinary wage from the court in the second half of the year, while GM Korea are being questioned by prosecutors over irrationality in employment involved by management and labor.