Sales of Japanese cars in S. Korea slump amid row

SEOUL: Sales of Japanese-branded autos in South Korea slumped in July amid a worsening row between the two countries that has led to consumer boycotts and efforts by Seoul to cut the economy’s reliance on imports from Japan.

Industry data out of South Korea yesterday showed Toyota’s sales in the country tumbled 32% from a year earlier while Honda’s sales skidded 34%.

Although automakers are still assessing the main factors driving the declines last month, industry participants and analysts expect an intensifying boycott campaign to hurt demand further, as tensions grow.

Japan tightened controls in July on exports to South Korea, escalating a row over wartime forced labourers and sparking a boycott by South Korean consumers of Japanese products and services, from cars, beer and pens to tours.

On Friday, Japan escalated tensions by removing South Korea from a list of export destinations approved for fasttrack status.

“Showroom visits are declining while consumers are holding off on signing contracts,” a Honda Korea official told Reuters.

South Korean representatives for Honda and Toyota did not provide any commentary on the sales trends and said they would need to assess the reasons for the decline.

However, industry watchers said public sentiment was a factor behind the sharp falls.

“The South Korean public is angry about Japan ... It will soon become a taboo to drive a Japanese cars in Korea,” Daelim University College automotive engineering Professor Kim Pil-so said.

Earlier yesterday, South Korea’s government announced plans to invest about 7.8 trillion won ($6.48 billion) in research and development for local materials, parts and equipment over the next seven years in an effort to cut the reliance on Japanese imports.

South Korea plans to improve economic “self-sufficiency” in regards to the production of 100 key components, materials and equipment items used to make chips, displays, batteries, automobiles and other products.

It aims to stabilise supply of these items over the next five years.

While foreign-branded cars make up a small portion of domestic auto sales in South Korea, the business community is concerned a consumer swing away from Japanese imports for political reasons could grow in other sectors, like tourism and retail.