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March 3, 2020

Virus causes South Korean automakers’ sales to tank in February

Domestic sales by South Korea's five largest automakers plunged by over 20% to 81,772 units in February 2020 from 102,285 units in the same month of last year, according to preliminary data released individually by the companies.

By bcusack

Domestic sales by South Korea’s five largest automakers plunged by over 20% to 81,772 units in February 2020 from 102,285 units in the same month of last year, according to preliminary data released individually by the companies.

The data did not include sales by low volume commercial vehicle manufacturers, including Tata-Daewoo and Daewoo Bus Corporation, as well as sales of imported vehicles which will be covered in a separate report when data is released later in the month.

Together these accounted for 14% of total vehicle sales in the country last year.

Sales last month were held back by plant closures at most of the vehicle manufacturers, as the outbreak of the COVID19 coronavirus in China disrupted component supply. This affected both domestic sales and exports.

South Korea was also one of the countries worst affected by the global spread of the virus, with over 4,800 confirmed infections and 34 deaths to date, and this has had a significant effect on normal business and consumer activity, including vehicle purchases.

Hyundai Motor led the domestic market lower last month with a 26% sales decline to 39,290 units, followed by Kia with a 14% decline to 28,681 units, GM Korea 4,978 (-3.8%) and Renault Samsung 3,673 (-25%) while SsangYong Motor was the worst performing brand with a 33% sales decline to 5,100 units.

Domestic sales declined 17.5% to 181,374 units in the first two months of 2020 from 219,749 units a year earlier.

While the supply of components from China improved significantly in the last two weeks, with most vehicle assembly plants in South Korea able to resume operations, there were still some shortages and some degree of disruption to production continued. 

More important perhaps is the effect that COVID19 is having on consumer and business activity and the prospect of further sales declines in coming months.

Global sales by the country’s ‘big five’ automakers, including vehicles Hyundai and Kia produced overseas, fell by almost 11% to 505,212 units in February from 565,568 a year earlier, reflecting weak domestic and overseas sales.

Sales in the first two months of the year were down by 8.3% at 1,058,770 units from 1,154,650.

Overseas sales, including exports and vehicles Hyundai/Kia assembled overseas, fell by 8.6% to 423,490 units last month from 463,283 a year earlier with the sharpest declines seen in China and South Korea.

Year to date sales were down by 6.1% at 877,446 units from 934,901 units a year earlier.

Hyundai Motor ‘s global vehicle sales fell by 13% to 275,044 units in February from 315,820 units in the same month of last year, reflecting weak global demand and temporary plants closures at home and in China as the coronavirus outbreak disrupted regional supply chains.

Global sales were down by 8.3% at 579,120 units in the first two months of the year from 631,214 units a year earlier.

Hyundai said it was looking to reduce its dependence on China suppliers in favour of manufacturers located in other low cost, emerging markets in Asia and elsewhere.

Hyundai domestic sales plunged by over 26% to 39,290 units last month from 53,406 a year earlier, due to plant closures and as consumer and business confidence weakened significantly as the coronavirus continued to spread in the country.

Its best-performing models last month were the Grandeur and the Sonata passenger cars. Sales in the first two months of the year fell by almost 24% to 86,881 units from 113,846 units in the same period of last year.

Overseas sales fell by over 10% to 235,754 units in February from 256,485 units a year earlier, despite buoyancy in North America which was more than offset by weak volume in China and in South Korea.

Overseas volume in the first two months of the year was down by close to 7% to 589,869 units from 631,214 a year earlier.

Kia Motors‘ global sales fell by 5% to 187,844 units in February from 197,656 units a year, reflecting weak global demand and disruption to vehicle production at home and in China due to the COVID19 outbreak.

Sales in the first two months of the year were just 1.1% lower at 402,956 units from 407,526 units a year earlier.

Domestic sales fell by 14% to 28,681 units last month from 33,222 a year earlier, with domestic output disrupted by supply disruption and weakening demand. Sales in the first two months of the year were down by 7.7% at 65,731 units from 71,232 a year earlier. 

Overseas sales fell by 3.2% to 159,163 units in February from 164,434 units a year earlier but were still up slightly to 337,225 units in the first two months of the year from 336,294 a year earlier.

GM Korea‘s global sales fell 14% to 28,126 units in February from 32,718 last year, reflecting declining domestic and overseas sales. Cumulative sales in the first two months of the year were almost 10% lower at 417,226 units from 462,871 a year earlier.

Domestic sales fell by 3.8% to 4,978 units last month from 5,177 a year earlier, in line with broad market weakness, resulting in just a slight decline in year to date sales to 10,079 units from 10,230.

GM Korea launched local production of the Trailblazer SUV late in January, with domestic sales starting early February, which helped the company outperform in its home market last month.

Exports fell 16% to 23,148 units in February from 27,541 a year earlier and by 37% to 38,531 units in the first two months of the year from 61,193 previously.

Renault -Samsung saw its global sales plunge by almost 40% to 7,057 units in February from 11,721 units a year earlier due to weaker domestic and export sales. Sales were down by almost 48% at 13,290 units in the first two months from 25,414 units previously.

Domestic sales fell 25% to 3,673 units last month from 4,923 a year ago, with the ageing product line clearly struggling in a time of weak demand.

Year to date domestic sales were down 21% to 7,976 units from 10,097 previously.

In December the company said it aimed to lift domestic sales to over 100,000 units in 2020 from 76,879 in 2019 with the launch of three new models and three upgraded models in the first half of the year.

The three new models are the XM3 compact SUV, scheduled to be launched in the first quarter, the second generation QM3 SUV and the new Zoe battery electric vehicle, both of which were due out in the second quarter.

The revised models are the SM6 sedan and SUV plus the Master van. 

Exports crashed by over 50% to 3,384 units in February from 6,798 a year earlier, reflecting the end last year of export orders for the Rogue SUV from Nissan Motor Japan, with year to date volume down by over 65% to 5,314 units from 15,317.

SsangYong Motor  reported a drop in global sales of almost 25% to 7,141 units in February from 9,481 a year earlier, reflecting weaker domestic sales and exports  with production affected by supply chain disruption. 

Domestic sales plunged by 33% to 5,100 units last month from 7,579 a year earlier resulting in a 35% drop in year to date sales to 10,657 from 16,366.

Exports declined almost 10% to 2,041 units in February from 2,262 previously and by 4,137 in the first two months of the year from 4,463. 

In late January Mahindra & Mahindra proposed a KRW500bn (US$428m) recovery plan to creditor banks including the state owned Korea Development Bank designed to return its loss making subsidiary to profit by 2022.

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