Korea’s auto exports set to shrink for 2nd year

South Korea’s outbound shipments of automobiles, one of the country’s top exports, are set to decline for two consecutive years this year, handing over the world’s third-largest auto exporter title to Mexico, government data showed Sunday.

A total of $36.07 billion in vehicles was shipped overseas in the first 11 months of this year, declining 13 percent from the previous year’s $41.43 billion, according to data by the Ministry of Trade, Industry and Energy. 

A two-straight year decline is the first time since the 2008-09 global financial crisis. 

Overall weak demand from emerging markets such as Russia and Brazil and lengthy wage negotiations at the most of carmakers weighed down on the auto exports, an official at the trade ministry said.

The negotiations between the unionized workers and management of South Korea’s biggest carmaker Hyundai Motor collapsed in July and continued until mid-October, dampening production. For Kia Motors, the second-largest carmaker and also Hyundai’s sister company, it also took over four months from late June to early November.

At the highest of strikes, the car production plummeted by 23.8 percent on-year in August.

The yearly decline is likely to be seen despite a rebound in November.

In November, the number of car exports grew 0.9 percent on-year to 260,491 cars while the value increased 1.5 percent to $3.98 billion, growing for the first time in 13 months in terms of value.

“The production recovered as wage negotiations between unions and automakers ended and demand for sport utility vehicles increased,” the METI official said.

South Korea’s auto exports reached its peak in 2014 with $45.8 billion worth of cars exported, and have since declined amid sluggish global economy and growing competition.

The country is also likely to be overtaken by Mexico in 2016 as the third-largest auto exporter it has maintained since 2005. Through November, automakers here shipped 2.32 million cars, while data from Mexico’s auto industry group AMIA showed that the country exported 2.55 million units during the same period.

Meanwhile, the imported car market in South Korea is expected to exceed $10 billion for two straight years. In the period between January and October, the auto imports grew 3.2 percent to $8.92 billion from $8.64 billion in the same period a year earlier despite decline in the number of sales of imported cars from the same period, indicating that more expensive imported cars were sold than last year.

If the trend is maintained, the auto imports would also exceed $10 billion in value again this year. Last year, the largest-ever $10.78 billion in value was imported, growing for the sixth consecutive year. 

By Park Ga-young (gypark@heraldcorp.com)