Monday, December 01, 2008
What's up with Korea's Car Makers--This Week
To say I'm watching Korea's economy is an understatement. Things change weekly.
As the Number 5 auto producing nation, Korea 's car manufacturing is a great indicator. For Hyundai, its the first cutback in a decade.
On the other hand, it's a good thing. Korean manufacturers tend to be top-down. Responding to the market is a better policy.
Korea Herald notes..
As both domestic sales and exports slump, local carmakers are cutting back production and taking other cost-saving measures.
Yesterday, one of GM Daewoo's two assembly lines at its plant in Bupyeong, Gyeonggi Province began a month-long break. The other production line at the plant will go on a two-week break from Dec. 22 until Jan. 4 when both lines will resume production.
Production at Hyundai Motor Co., which had maintained until last month that it had no plans to cut back production, is also being slowed to match the falling demand. The company halted overtime production at most of its domestic plants, cutting the company's annual output by 10 percent or about 150,000 units. With the exception of the plant producing the compact cars i30 and Avante, weekend production has also been stopped at all domestic Hyundai Motor's plants.
The country's two smallest carmakers, Renault Samsung Motors Co. and Ssangyong Motor Co., have been operating their plants at below usual levels for some time. In October, Ssangyong Motor announced that 350 workers from the carmaker and associated firms, will be put on paid leave to reduce output until conditions improve while Renault Samsung halted overtime at its Busan plant last month. Officials at the two carmakers said they have no plans to implement additional output-cutting measures in the immediate future.
With Hyundai Motor joining the fast spreading trend of cutting production, Kia Motors Corp. is the only Korean carmaker to maintain production at normal levels, whose November domestic sales rose 3.7 percent from the same month last year.
For the other four companies, the production cutting measures seem to have come just in time as their domestic and overseas sales took a massive setback last month.
The largest drop was seen in Ssangyong Motor's sales. The company's domestic sales fell 59.2 percent from the same month last year while exports were reduced by more than 64 percent. The company was followed by GM Daewoo that saw domestic sales fall by 56.9 percent and exports drop 24.9 percent from the same month last year.
Hyundai Motor's local sales took a 34.4 percent setback from the same month last year. However, the company's overseas sales advanced by about 15,000 units, reducing the overall sales decline to 1.6 percent.
Renault Samsung's domestic sales fell 20.7 percent from the same month last year while exports, which had until recently shored up the company's overall sales figures, dropped 10.8 percent over the same perio