Carmakers rise after news of Big 3 bailout
Korean carmakers and auto parts manufacturers surged on the Seoul stock market yesterday, after news reports said a tentative agreement to rescue the ailing U.S. auto industry was reached Tuesday between the Bush administration and congressional Democrats.Hyundai Motor, Korea’s biggest automaker, jumped 9.2 percent to close at 47,050 won ($33.76), while the benchmark Kospi rose 3.6 percent. Kia Motors, the nation’s second-biggest and Hyundai’s affiliate, gained 8.5 percent to 7,510 won.
Ssangyong Motor Co., the nation’s smallest carmaker and the local unit of China’s SAIC, rose 3.8 percent to 1,090 won. Hyundai Mobis, an auto-parts affiliate of Hyundai, climbed 6.1 percent to 66,300 won.
According to reports by The Washington Post and other media, U.S. Democratic lawmakers agreed on rough outlines for a bailout to provide a $15 billion emergency loan program for General Motors Corp., Ford and Chrysler.
Analysts such as Kim Byeong-guk of Daishin Securities said the collapse of “the U.S. Big Three” could bring about a big slump in the real economy and in overall auto demand rather than help rival automakers, including Korean companies.
In addition, the “inevitable output cut” following the U.S. automakers’ restructuring that will accompany the rescue program will provide opportunities to Korean auto exporters, analysts said.
“It will take three to four years for the U.S. Big Three to reform their lineups and prepare for the launch of new competitive models,” said Yun Tae-sik of Dongbu Securities. “That will be a good opportunity for Hyundai-Kia to pull up their market share and brand image in the U.S. market.”
By Moon So-young Staff Reporter [symoon@joongang.co.kr]
with the Korea JoongAng Daily
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