South Korean car makers reported a combined 16% drop in July sales on Tuesday (1 August) as strikes by unionised workers disrupted production.
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The labour disputes are seen pressuring automakers’ earnings in the third quarter, especially at Hyundai where a strike was more damaging than expected, Reuters noted.
“Hyundai’s third-quarter earnings will inevitably be hit by the strike in July since the company’s output was stopped for almost a month,” Daewoo Securities auto analyst Park Young-ho told the news agency, adding: “The outlook for local demand is not too bright as consumer sentiment has been dampened amid sustained higher oil prices.”
According to the report, combined July vehicle sales at South Korea’s five car makers fell to 362,948 vehicles from 432,078 in July 2005 while exports dropped 12.7% to 288,043 vehicles in July, with domestic sales down 26.5% to 74,905.
Hyundai sold 128,489 vehicles in July, down 36.7% from a year ago and 42.4% lower than June’s revised figure of 222,926 and blamed the lost sales on the strike, Reuters said, adding that Hyundai’s June exports of 100,392 vehicles were down 33.4% year on year.
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By GlobalDataBut sales by Hyundai’s overseas plants, unaffected by the Korean strikes, rose 35.3% to 70,037 units in July from a year before. Domestic sales, however, plunged 46.4% year on year and 43.7% month on month.
Reuters noted that unionised workers at Hyundai had stopped work for several hours almost every business day for a month since June 26, costing the company 1.3 trillion won ($US1.36bn), or 93,882 vehicles, in lost output.
Last Friday, the union voted to accept management’s offer of an average 5.1% rise in basic salaries, ending the strike. But union workers at affiliate Kia have been on a partial strike since Thursday after similar actions between July 18 and 20.
Reuters said Kia posted a 31.3% decline in July sales to 78,620 cars compared with a year ago, led by a 36.2% fall in exports.
SUV maker Ssangyong Motor, now owned by China’s Shanghai Automotive Industry Corp. (SAIC), saw sales in July drop 51.8% to 6,477 vehicles after its unionised workers downed tools for nine business days from 14 July to demand higher salaries and to protest job cuts sought by SAIC – no agreement has yet been reached, the report noted.
On the other hand, GM Daewoo Automotive and Technology posted a 48.4% rise to 136,554 units in overall sales last month, boosted by a 49.5% leap in exports and also helped by domestic sales of its new Winstorm SUV.
Reuters saud GM Daewoo’s union, which refused to work for two days in July, last Thursday voted against a tentative wage deal but has not yet decided whether to stage another strike.
Renault Samsung Motors also reported a 40% increase in July sales to 12,808 cars, thanks to booming exports, the report added.
