Automakers facing challenges

Top executives from Korea’s five automakers expressed fear of a possible crisis in the industry this year in a recent automobile magazine.
In the January edition of a monthly magazine published by the Korea Automobile Manufacturers Association, Choi Jae-guk, president of Hyundai Motor Co., said, “The auto industry will experience harsher management difficulties this year than last.”
He added that the won’s steep appreciation against other currencies is expected to hurt Korean carmakers’ profitability. In particular, a lower yen value will boost performance by Japanese carmakers in the Korean market. According to Hyundai, the average price gap between its cars and Japanese vehicles has narrowed from 15 percent to 6 percent recently.
Cho Nam-hong, president of Hyundai’s affiliate, Kia Motors Corp., warned of China’s rapid strikes in the car business.
“Chinese automakers are quickly narrowing the technological gap with Korean rivals, aiming to overtake them in key export markets such as the United States and Europe,” he said. “Carmakers from advanced countries like Japan are keeping Korean automakers in check, while imported vehicles are expanding market share here with lower price tags resulting from the won’s higher value.”
Jean Marie Hurtiger, chief executive of Renault Samsung Motor Co., also forecast that Korean cars’ competitiveness will weaken across the global auto market.
Another foreign top manager, Michael Grimaldi, chief executive of GM Daewoo Auto and Technology Co., described 2007 as the year to “solve challenging tasks.” That means Korea’s car manufactures should come up with innovative measures to tackle the trouble they face now.
The second-largest automaker was last year designated as a global headquarters for developing small and compact car segments by its parent group, General Motors Corp.
Choi Hyung-tak, president of Ssangyong Motor Co., Korea’s smallest automaker, pointed out that external factors, such as the North Korean nuclear issue, rising raw material prices and labor conflicts will challenge auto makers.
Ssangyong aims to raise sales revenue by over 20 percent this year.

By Seo Ji-eun Staff Writer [spring@joongang.co.kr]