The Korea Herald

지나쌤

Car sales to plummet amid labor strikes

By Kim Yon-se

Published : Aug. 24, 2012 - 20:31

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Local major carmakers are expected to post a steep sales drop this month in the aftermath of labor strikes, automotive industry insiders said Friday.

Hyundai Motor has revised down its August sales target by about 20 percent from its earlier goal, as production of popular models such as the Avante, Sonata and Santa Fe has declined sharply.

“August is normally the month that records the fewest vehicle sales due to seasonal factors. This year, the labor dispute has aggravated the situation,” a company official said.

Kia Motors, an affiliate of Hyundai Motor, has also faced a similar situation. It is having difficulty normally operating assembly lines for vehicles like the New Sorento R and K5.

Hyundai and Kia saw their collective losses from each union’s recent partial strike come to around 1.7 trillion won ($1.5 billion).

The nation’s largest and second-largest automakers are estimated to suffer a delay in manufacturing of about 87,000 units ―- 59,000 vehicles for Hyundai and 28,000 vehicles for Kia ― this month.

While the two companies have expanded production capacity in major countries such as the U.S. and China, the prolonged strike in Korea is putting pressure on meeting the growing overseas demand.

In July, Hyundai exported 94,576 vehicles to overseas markets, a 23.5 percent decrease compared to 126,541 units in June. In terms of exports to the U.S., both Hyundai and Kia saw their deliveries decline 25.2 percent and 12.7 percent, respectively, from the previous month.

GM Korea, which operates factories in the nation, also followed suit.

The company, which had suffered continuous year-on-year sales drops, is expected to post a worsened performance in August sales due to delayed production of the Chevrolet vehicles amid the labor strike.

GM Korea’s recent policy to downsize its manpower structure via a voluntary redundancy program has been inviting backlash from the carmaker’s labor union, market observers said.

In July, the local unit of U.S.-based General Motors sold 60,720 units in July. Its domestic sales and exports dropped by 7.7 percent and 9 percent on-year, respectively.

Other players ― Renault Samsung Motors and Ssangyong Motor ― are estimated to see a decline in sales, being affected by the seasonal factor involving the summer vacation period.

By Kim Yon-se (kys@heraldcorp.com)