Friday, September 20, 2019
Japanese Carmakers Groping for New Strategies in Korea
Nissan May Pull out of Korea
Japanese Carmakers Groping for New Strategies in Korea
  • By Michael Herh
  • September 9, 2019, 13:53
Share articles

As Nissan is reportedly considering withdrawing from the Korean market due to the ongoing boycott of Japanese products in Korea, other Japanese car brands, such as Honda and Toyota, are looking for new marketing strategies.

Nissan is considering withdrawing from the Korean market due to a decrease in sales in the Korean market and a restructuring at the headquarters, said foreign news sources including the Financial Times (FT) on Sep. 8. If Nissan withdraws from the Korean market after 15 years of its presence in Korea, it will be the third Japanese car brand to leave Korea after Subaru and Mitsubishi in 2012.

Nissan entered the Korean market with the Infiniti brand in 2004. Its sales have since steadily grown. However, in 2016, the automaker was caught up in an unprecedented gas emission rigging scandal and its business began to decline in the Korean market. Since then, Nissan has suffered from a legal battle with the Korean government and a vehicle certification issue.

Nissan has been hit hard by the boycott of Japanese goods stemming from Japan’s restriction of exports to Korea. In August, the automaker sold only 58 units in the Korean market. This means that on average, two units were sold at a Nissan store in Korea for a month. Merely one year ago, Nissan sold 459 cars a month in the Korean market on average and its market share rose to 2.39 percent but this year, it has also dropped to 0.32 percent.

Another reason for Nissan’s withdrawal rumor is that a gloomy situation is facing the Nissan headquarters in Japan. In Japan, Nissan cut down 6,400 jobs by the end of this year due to poor performance stemming from sluggish sales. The carmaker will also cut its workforce by 12,500 employees and produce only 600,000 units at 14 factories in emerging economies in 2022. As you see, Nissan is planning a massive restructuring.

If Nissan withdraws from the Korean market, it will have an impact on other Japanese car brands' sales strategies in Korea. Toyota Korea will maintain the luxury Lexus brand in the Korean market as it has put up a good fight. But Toyota Korea has no choice but to make a change in its marketing strategy for Toyota brand cars which suffered a 60 percent drop in sales in the Korean market in August.

“As Honda enjoys steady sales of its motorcycles and Toyota Korea’s Lexus is still staying strong in the Korean market, it will not be easy for them to leave the Korean market.” said an official of the imported car industry of Korea. "Nissan is considering giving up the Korean market as part of its internal business strategy adjustments coupled with its merger with Renault."

A problem is that Nissan's withdrawal from Korea will also impact Renault Samsung which is a partner of Nissan. Renault Samsung is currently producing the SUV Rogue for export to North American for Nissan at its Busan plant.