Tue, Aug 06, 2019 page10

• Japanese auto sales slumping in South Korea

  • Reuters, SEOUL
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  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.

  

  South Korean Minister of Economy and Finance Hong Nam-ki, center, speaks as he presides over a meeting in Seoul yesterday to discuss ways to respond to Japan’s latest trade restrictions.

  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
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