Red Flag Raised for Korean Automakers

The five automakers in Korea -- Hyundai Motor, Kia Motors, GM Korea, SsangYong Motor and Renault Samsung Motors -- suffered a setback in auto exports in April.

A red flag has been raised for Korea's auto exports. The five automakers in Korea -- Hyundai Motor, Kia Motors, GM Korea, SsangYong Motor and Renault Samsung Motors -- suffered a setback in auto exports in April.

Hyundai, SsangYong and GM Korea recorded a double-digit growth in domestic sales on the strength of new car launches and sales promotions, but that was not enough to offset their sluggish exports.

The five automakers sold a total of 661,191 units in April, down 6.11 percent from the same month last year, according to their sales reports released on May 2.

Their poor performance was blamed on sluggish sales in overseas markets. In April, Hyundai and Kia’s overseas sales fell 9.3 percent and 2.5 percent year on year to 297,512 units and 185,773 units, respectively. SsangYong Motor (-28.5 percent), GM Korea (-1.2 percent) and Renault Samsung (-53.4 percent) suffered a drop in overseas sales as well.


Hyundai, SsangYong and GM Korea continued to enjoy their double-digit growth in the domestic market with promotions for new models and interest-free installment programs, but sluggish exports weighed them down. Hyundai expanded its domestic sales 12 percent to 71,413 units thanks to the strong sales performance of the large SUV Palisade.

SsangYong posted a 26.5 percent increase in sales by attaining monthly sales of 10,000 units for the second consecutive month thanks to the popularity of new models such as the Korando and the Rexton Sports.

GM Korea recorded a 19.6 percent increase in sales based on an interest-free installment program without down payment, which was introduced at the end of April. GM Korea's domestic sales have been growing for two consecutive months since March.

The automakers have a gloomier future for car exports. U.S. President Trump will announce in the middle of May whether the U.S. government will apply Clause 232 of the Trade Expansion Act to automobile imports. The clause can levy a tariff of up to 25 percent on imported cars. Currently, Korean-made automobiles exported to the United States account for more than 30 percent of Korea’s total annual exports to the United States. When the hefty tariff becomes a reality, Korean cars will lose price competitiveness in the U.S. market.

Even in the height of growing external uncertainties, an unfavorable mood has been facing the automobile industry this year. The labor and management of Renault Samsung have failed to conclude wage and collective agreements for 11 months since last year. Apart from strikes that the labor unions have gone, the situation has deteriorated to a point where the management shut down the factory.

The labor union of Hyundai Motor is also showing a sign of walking out this summer. There are a number of issues that cannot be easily addressed between the labor and management of Hyundai Motor such as ordinary wages and the creation of new-type automotive jobs in the Gwangju area. The labor and management of GM Korea has failed to agree on the issue of a new corporation’s succession of a collective bargain agreement. The two sides are head to head against each other over whether or not they will keep the collective bargain agreement unchanged. The GM Korea Labor Union has already secured the right to go on a strike so can walk out legally at any time.

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