South Korea's auto industry is facing increasingly tough times given a strong won, high oil prices and sluggish domestic consumption, an executive of the biggest carmaker said yesterday.
"The environment surrounding the South Korean auto industry is increasingly deteriorating," Hyundai Motor Co vice chairman Kim Dong-jin told a conference organized by the Federation of Korean Industries.
"There are big risk factors going forward such as a strong won, a weak yen, higher oil prices and a downturn in domestic consumption," Yonhap news agency quoted Kim as saying.
Hyundai, which, together with affiliate Kia Motors Corp, is the world's sixth-largest automaker, said the firm's sustainable growth is being threatened by global competition and growing safety and environmental regulations.
In addition to the won's strength against the US dollar and a rise in raw material prices, the weak yen is fueling exports by Japanese rivals Toyota and Honda.
Hyundai also faces falling productivity and shrinking profits. Net profit plunged 34 percent to 1.53 trillion won (US$1.63 billion) last year because of strikes and the won's rise.
The firm faced another strike threat yesterday after Hyundai's union said it might go on strike after wages talks broke down.
"Anything is possible," Ji Jin-sung, a union official said.
Union leaders will meet on Monday to decide on what steps to take, he said.
The automaker offered a 5.4 percent increase in base salary and annual bonuses equal to three months' wages before the talks collapsed, it said in an e-mailed statement yesterday.
Talks may resume, Hyundai spokesman Jake Jang said by telephone.
The company did not say how much the union was seeking in the wage negotiations.
Workers at Kia Motors, a Hyundai Motor affiliate, accepted a 5.2 percent salary raise and annual bonuses equal to one-and-a-half months worth of salary on Aug. 17.
Stoppages over wages in July last year cost the automaker production of 80,752 vehicles, valued at 1.12 trillion won.
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