By Kwak Yeon-soo – The Korea Times
Nissan Motor’s possible exit from Korea has come as no surprise as the carmaker has been reeling from plunging sales since July when Koreans began boycotting Japanese products amid rising tension between Tokyo and Seoul, according to industry officials Sunday.
Rumors of Nissan’s withdrawal have been intensifying since last Friday when the Financial Times (FT) reported that the Japanese automaker has been considering leaving Korea, hit hard by the deepening trade dispute.
It cited poor sales and ongoing financial losses as the main reasons.
Sales of Japanese cars in Korea more than halved in August from a year earlier, after Tokyo placed restrictions on the exports of high-tech materials used to manufacture semiconductors and display panels.
The decision was widely regarded as a retaliatory move after Korea’s top court ordered Japanese companies to compensate Korean victims forced to work for them in wartime.
According to the Korea Automobile Importers & Distributors, Nissan sold just 58 vehicles here in August, down 88 percent from a year ago.
Other Japanese automakers have also seen sales plummet. Toyota’s sales in Korea declined 59 percent to 542 in August from a year earlier, while Honda’s sales fell 80 percent to 138.
Calls for Koreans to boycott Japanese goods have continued to rise after Tokyo decided to remove Korea from its “whitelist” of preferential trading partners.
Industry officials said Nissan’s likely withdrawal was part of the company’s global restructuring on the back of weak sales.
A local carmaker official, who asked not to be named, said the situation was unfortunate, though there are many other factors that may have led to the current situation.
“On top of the consumer boycott of Japanese products, it is likely that Nissan officials found the Korean market to be without merit as it will end the Nissan Rogue SUV manufacturing deal with Renault Samsung Motors, a joint venture with Nissan’s French partner Renault SA, by the end of this year” the official said.
He said Nissan’s market share in Korea has long lagged behind its rivals ― it has plummeted to 0.32 percent from 2.39 percent a year ago.
When asked if there was a possibility for other Japanese carmakers to follow Nissan’s move, he said, “Nissan is an unusual case because its strategic alliance model cannot be found in other carmakers, and it has been hit hard by the strong union at Renault Samsung.”
An official from another local carmaker echoed the same view, saying that withdrawal can be linked to several factors, including faulty systems and customer dissatisfaction.
“Nissan’s pullout from Korea may be as part of a broader restructuring of its global operations that could also see the company withdraw from other markets,” the official said.
Nissan announced last month it would reduce global production capacity by 10 percent and cut around 12,500 jobs by 2022.
A spokesman for Nissan Korea refused to comment, saying “We cannot comment on speculative reports.”