South Korea Auto Exports Drop 13%

South Korea’s outbound shipments of cars, one of the country’s top exports, are set to decline for two consecutive years this year, handing over the world’s third-largest auto exporter title to Mexico, government data showed Sunday, Yonhap reported on December 12.

A total of $36.07 billion in vehicles was shipped overseas in the first 11 months of this year, declining 13% from the previous year’s $41.43 billion, according to data from the Ministry of Trade, Industry, and Energy.

A two-straight year decline is the first time since the 2008-09 global financial crisis.

Overall weak demand from emerging markets such as Russia and Brazil and lengthy wage negotiations at the most of the carmakers weighed down on the auto exports, an official at the trade ministry said.

The negotiations between the unionized workers and management of South Korea’s biggest carmaker Hyundai Motor collapsed in July and continued until mid-October, dampening production. For Kia Motors, the second-largest automaker and also Hyundai’s sister company, it also took over four months from late June to early November.

At the highest of strikes, car production plummeted by 23.8% -on-year in August.

The yearly decline is likely to be seen despite a rebound in November.

In November, the number of car exports grew 0.9% on-year to 260,491 cars while the value increased 1.5% to $3.98 billion, growing for the first time in 13 months regarding value.

“The production recovered as wage negotiations between unions and automakers ended and demand for sport utility vehicles increased,” the METI official said.

South Korea’s auto exports reached its peak in 2014 with $45.8 billion worth of cars shipped, and have since declined amid sluggish global economy and growing competition.

The country is also likely to be overtaken by Mexico in 2016 as the third-largest auto exporter it has maintained since 2005. Through November, automakers here shipped 2.32 million cars, while data from Mexico’s auto industry group AMIA showed that the country exported 2.55 million units during the same period.

Meanwhile, the imported car market in South Korea is expected to exceed $10 billion for two straight years. In the period between January and October, auto imports grew 3.2% to $8.92 billion from $8.64 billion in the same period a year earlier despite a decline in the number of sales of imported cars from the same period, indicating that more expensive imported cars were sold than last year.

If the trend is maintained, the auto imports would also exceed $10 billion in value again this year. Last year, the largest-ever $10.78 billion in value was registered, growing for the sixth consecutive year.