South Korea’s auto industry is facing increasingly tough times due to the strong won, high oil prices and sluggish domestic consumption, an executive of the biggest car maker said on Friday.
“The environment surrounding the South Korean auto industry is increasingly deteriorating,” Hyundai Motor vice-chairman Kim Dong-Jin told a conference hosted 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 with affiliate Kia Motors is the world’s sixth-largest automaker, said the company’s sustainable growth is being threatened by unlimited global competition and growing safety and environmental regulations.
In addition to the won’s strength against the dollar and a rise in raw material prices, the weak yen is fuelling exports by Japanese rivals Toyota and Honda.
Hyundai also faces falling productivity and shrinking profits. Net profit plunged 34 per cent to 1.53 trillion won (USD 1.63 billion) last year due to strikes and the won’s rise.
It is preparing to make a revised pay offer to its 44,000-member union in negotiations on today afternoon in the south-eastern city of Ulsan.
If the offer is unacceptable, the union says it will call a stoppage.
Last year employees stopped work for a total of 33 days, causing 1.3 trillion won in lost sales, according to the company.