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29763
Wed, 11/12/2008 - 20:45
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https://www.oananews.org//node/29763
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News Focus) S. Korean carmakers sell assets, cut output amid crisis
SEOUL, Nov. 12 (Yonhap) -- Stung by falling profits and slumping demand
worldwide, South Korean carmakers are struggling to ride out tough times through
asset sales, production cuts and hiring freezes, according to automakers and
analysts on Wednesday.
Some industry executives say that the nation's auto industry, led by Hyundai
Motor Co., has fallen into turmoil even more serious than in the late 1990s, when
South Korea was buffeted by the Asian financial crisis.
Overseas sales account for nearly three-quarters of South Korean auto production.
As the global financial crisis spreads to this nation's automakers, they stand to
lose the most, analysts say.
"If global sales continue to fall through the first half of next year, some
automakers will probably lay off workers," said Kang Cheol-koo, an executive of
the Korea Automobile Manufacturers' Association (KAMA).
The worldwide economic slowdown has come just at the wrong time. The market for
new cars and trucks in South Korea has fallen 1 percent to 992,384 units so far
this year.
In the first 10 months of this year, vehicle production in South Korea fell 3
percent from a year ago to 3,242,408 units, KAMA data showed. For the same
period, exports declined 3.6 percent to 2,228,393 units.
The industry group originally expected output to total 4.2 million units this year.
Top automaker Hyundai plans to shut down its sole U.S. assembly plant for 11 days
by the end of this year in reaction to tumbling sales in the world's largest auto
market.
In a statement, Robert Burns, a spokesman at Hyundai's U.S. subsidiary, said, "A
number of economic factors beyond our control have resulted in decreased demand
for automobiles, generally, in the United States."
Last month, Hyundai reported a 31-percent plunge in U.S. sales amid tight auto
finance credit and fears of an economic recession in the world's largest economy.
Hyundai, which has sold 358,484 units so far this year in the U.S., is on course
to miss its 2008 sales target of 550,000 vehicles there.
Hyundai and its affiliate, Kia Motors Corp., plan to reduce production by 100,000
vehicles worldwide by the end of this year, local media reported.
Other companies are following suit.
GM Daewoo Auto & Technology Co., the South Korean unit of General Motors Corp.,
is considering temporarily closing all of its three assembly plants in South
Korea.
Kim Young-soo, a spokesman at GM Daewoo, said the company will make a final
decision by the end of this month.
If GM Daewoo, the third-largest automaker in South Korea, idles its plants, it
would be the first time since 2002, when a troubled GM and its partners took a
majority stake in Daewoo Motor Co. The automobile unit of the now defunct Daewoo
Group had collapsed during the 1997-98 crisis.
GM Daewoo Chief Executive Officer Michael Grimaldi said late last month that the
company will freeze new hiring next year to help it cut costs.
"We are in very serious financial condition around the world," Grimaldi said in a
press conference on Oct. 29, adding, "Global demand has been weakened." Exports
account for 95 percent of total sales at GM Daewoo.
For smaller companies, exposure to economic storms is striking.
Ssangyong Motor Co., the nation's smallest carmaker, said Monday it has sold half
of its plant site to raise funds for working capital.
The asset sale brought 40 billion won (US$30 million) in cash to the
debt-stricken automaker, Ssangyong said in a statement.
Ssangyong, the South Korean unit of China's Shanghai Automotive Industry Corp.,
said it will sell other assets, noting that a restructuring program will
strengthen its short-term financial base. However, analysts are skeptical, citing
the company's weak fundamentals, heavy debts and slumping sales.
Analysts say Ssangyong is unlikely to recover anytime soon as its lineup is
dominated by expensive, gas-guzzling vehicles.
"Without a significant improvement in its product lineup, sluggish earnings will
continue for the time being," said local brokerage Kiwoom Securities in a
research note on Ssangyong's outlook.
In the third quarter of this year, Ssangyong lost 28.2 billion won, marking the
company's fourth consecutive quarterly loss. Quarterly sales slipped 8.2 percent
to 684.3 billion won.
(END)
worldwide, South Korean carmakers are struggling to ride out tough times through
asset sales, production cuts and hiring freezes, according to automakers and
analysts on Wednesday.
Some industry executives say that the nation's auto industry, led by Hyundai
Motor Co., has fallen into turmoil even more serious than in the late 1990s, when
South Korea was buffeted by the Asian financial crisis.
Overseas sales account for nearly three-quarters of South Korean auto production.
As the global financial crisis spreads to this nation's automakers, they stand to
lose the most, analysts say.
"If global sales continue to fall through the first half of next year, some
automakers will probably lay off workers," said Kang Cheol-koo, an executive of
the Korea Automobile Manufacturers' Association (KAMA).
The worldwide economic slowdown has come just at the wrong time. The market for
new cars and trucks in South Korea has fallen 1 percent to 992,384 units so far
this year.
In the first 10 months of this year, vehicle production in South Korea fell 3
percent from a year ago to 3,242,408 units, KAMA data showed. For the same
period, exports declined 3.6 percent to 2,228,393 units.
The industry group originally expected output to total 4.2 million units this year.
Top automaker Hyundai plans to shut down its sole U.S. assembly plant for 11 days
by the end of this year in reaction to tumbling sales in the world's largest auto
market.
In a statement, Robert Burns, a spokesman at Hyundai's U.S. subsidiary, said, "A
number of economic factors beyond our control have resulted in decreased demand
for automobiles, generally, in the United States."
Last month, Hyundai reported a 31-percent plunge in U.S. sales amid tight auto
finance credit and fears of an economic recession in the world's largest economy.
Hyundai, which has sold 358,484 units so far this year in the U.S., is on course
to miss its 2008 sales target of 550,000 vehicles there.
Hyundai and its affiliate, Kia Motors Corp., plan to reduce production by 100,000
vehicles worldwide by the end of this year, local media reported.
Other companies are following suit.
GM Daewoo Auto & Technology Co., the South Korean unit of General Motors Corp.,
is considering temporarily closing all of its three assembly plants in South
Korea.
Kim Young-soo, a spokesman at GM Daewoo, said the company will make a final
decision by the end of this month.
If GM Daewoo, the third-largest automaker in South Korea, idles its plants, it
would be the first time since 2002, when a troubled GM and its partners took a
majority stake in Daewoo Motor Co. The automobile unit of the now defunct Daewoo
Group had collapsed during the 1997-98 crisis.
GM Daewoo Chief Executive Officer Michael Grimaldi said late last month that the
company will freeze new hiring next year to help it cut costs.
"We are in very serious financial condition around the world," Grimaldi said in a
press conference on Oct. 29, adding, "Global demand has been weakened." Exports
account for 95 percent of total sales at GM Daewoo.
For smaller companies, exposure to economic storms is striking.
Ssangyong Motor Co., the nation's smallest carmaker, said Monday it has sold half
of its plant site to raise funds for working capital.
The asset sale brought 40 billion won (US$30 million) in cash to the
debt-stricken automaker, Ssangyong said in a statement.
Ssangyong, the South Korean unit of China's Shanghai Automotive Industry Corp.,
said it will sell other assets, noting that a restructuring program will
strengthen its short-term financial base. However, analysts are skeptical, citing
the company's weak fundamentals, heavy debts and slumping sales.
Analysts say Ssangyong is unlikely to recover anytime soon as its lineup is
dominated by expensive, gas-guzzling vehicles.
"Without a significant improvement in its product lineup, sluggish earnings will
continue for the time being," said local brokerage Kiwoom Securities in a
research note on Ssangyong's outlook.
In the third quarter of this year, Ssangyong lost 28.2 billion won, marking the
company's fourth consecutive quarterly loss. Quarterly sales slipped 8.2 percent
to 684.3 billion won.
(END)
