Sales of Japanese-branded autos in South Korea slumped last month amid a worsening diplomatic row between the two countries that has led to consumer boycotts and efforts by Seoul to cut the economy’s reliance on imports from Japan.
Industry data out of South Korea yesterday showed Toyota Motor Corp’s sales in the country tumbled 32 percent from a year earlier while Honda Motor Co’s sales skidded 34 percent.
Although automakers are still assessing the main factors driving the declines last month, industry participants and analysts expect an intensifying boycott campaign to hurt demand further, as diplomatic tensions grow.
Photo: AP
Japan tightened controls on exports to South Korea last month, escalating a row over wartime forced laborers and sparking a boycott by South Korean consumers of Japanese products and services, from cars, beer and pens to tours.
On Friday, Japan escalated tensions by removing South Korea from a list of export destinations approved for fast-track status.
“Showroom visits are declining while consumers are holding off on signing contracts,” a Honda Korea official said, asking not to be identified because of the sensitivity of the matter.
South Korean representatives for Honda and Toyota did not provide any commentary on the sales trends and said they would need to assess the reasons for the decline.
However, industry watchers said public sentiment was a factor behind the sharp falls.
“The South Korean public is angry about Japan... It will soon become a taboo to drive a Japanese cars in Korea,” said Kim Pil-so, an automotive engineering professor at Daelim University College.
The data from the Korea Automobile Importers & Distributors Association also showed Lexus, Toyota’s luxury badge and the third-most imported brand into South Korea after Mercedes and BMW, saw sales down 25 percent from the previous month, although they were still up 33 percent from the previous year.
While foreign-branded cars make up a small portion of domestic auto sales in South Korea, the business community is concerned a consumer swing away from Japanese imports for political reasons could grow in other sectors, like tourism and retail.
Japan’s Fast Retailing Co fashion brand Uniqlo has been a prime target for the boycott, with its 186 stores in South Korea making the country its second-biggest overseas market in terms of outlets.
Fast Retailing chief financial officer Takeshi Okazaki last month acknowledged there had been some impact on its sales as a result of the campaign, without elaborating.
Japan’s Asahi Group Holdings, whose Asahi Super Dry is the most popular import brand in South Korea, on Thursday said the boycott had hit its beer sales as it lowered its profit guidance slightly.
Earlier yesterday, South Korea’s government announced plans to invest about 7.8 trillion won (US$6.48 billion) in research and development for local materials, parts and equipment over the next seven years in an effort to cut the reliance on Japanese imports.
South Korea plans to improve economic “self-sufficiency” in regards to the production of 100 key components, materials and equipment items used to make chips, displays, batteries, automobiles and other products.
The government aims to stabilize supply of these items over the next five years.
South Korean Minister of Trade, Industry and Energy Sung Yun-mo said the government would also financially support local companies in mergers and acquisitions of foreign companies and expand tax benefits to lure more international investment, while easing labor and environmental regulations so that local companies could boost their production.
Speaking at a Cabinet meeting yesterday, President Moon Jae-in called for “extraordinary resolve” to overtake Japan’s economy, claiming that working with North Korea would be one way of doing so.
Additional reporting by AP and AFP
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to