Gov't may end auto industry support early

By Lee Joon-seung
SEOUL, June 1 (Yonhap) -- The government will discontinue a support package for
the auto industry ahead of schedule if local carmakers put off meaningful
restructuring efforts, official sources said Monday.

Sources at the Ministry of Strategy and Finance and the Ministry of Knowledge
Economy said the sales-bolstering program, which gives tax benefits to Koreans
who own an old car and purchase a new one, could be halted after September.
The package went into effect in May and is currently set to last until the end of
the year. It is designed to help hard-pressed automakers overcome the worldwide
economic slump and boost the sector's competitiveness.
Under the program, a tax benefit of up to 2.5 million won (US$2,000) can be
claimed for owners whose vehicles were registered before 2000. Of the 16.79
million cars registered in the country as of late 2009, about 5.48 million owners
are eligible for the benefit.
"The support package was offered in exchange for earnest restructuring efforts by
carmakers, but there has been little effort to make necessary changes so far," a
ministry official said.
The official, who declined to be identified, said in the case of Hyundai Motor
Co. and Kia Motors Corp., unions have threatened to go on strike if their
management pushes forward with restructuring.
He also noted that workers at Ssangyong Motor Co., South Korea's smallest
automaker, have gone on strike but that their management countered by closing
down the company's assembly line over the weekend.
"The government's stance on restructuring and implementing 'advanced'
labor-management practices is firm and if no changes are made it will take steps
to end support," the official said.
The finance ministry, in addition, said that it will no longer extend the 30
percent consumption tax cut that had been offered from Dec. 19. The tax break,
which was to expire at the end of this month, provided up to 500,000 won for
people buying new cars.
The government, meanwhile, said that it will put off a subsidizing program aimed
at boosting sales of small cars until next year. Under that program, 1 million
won in state subsidies will be offered to consumers who buy smaller, fuel
efficient autos.
yonngong@yna.co.kr
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