Ford, Jeep hit hard by soaring won-dollar exchange rate
Ford Korea and Jeep Korea are expected to be hit hard by the strengthening dollar, as U.S. automakers settle their payments with the greenback unlike European or Japanese counterparts, according to industry officials, Thursday.
This adds more financial pressure on the two local subsidiaries of the U.S. carmakers, as their market share and vehicle sales are plummeting in the Korean market. Considering the weak consumer sentiment toward U.S. cars, they are not in a position to raise their vehicle prices to make up for the potential loss from the rising value of the dollar against the korean won.
This is not the case for other European automakers that settle their payments either with the Korean won or the euro, leaving them relatively less influenced by the strengthening dollar.
Officials from carmakers here and abroad are expressing concerns that customers may end up falling victim in the end.
“If imported vehicle prices increase in line with the rising dollar, sellers may reduce incentives or services provided to customers, as they have to ensure their profitability,” an official from a carmaker said. “It will be hard for them to increase their vehicle price by a huge margin at a time when they lose more and more presence here amid toughening market rivalry.”
Ford Korea reported a sales decline of 30 percent in 2023 from a year earlier. It also turned into an operating loss of 4.9 billion won ($3.56 million) during the same period. Ford car sales also hit a new low of 3,483 last year, down 35.2 percent from the previous year. Reflecting on the dismal sales performance, Ford Korea is rumored to exit the Korean market around the end of this year, though the company has declined to make any comment on the issue.
Jeep Korea also sold 4,512 vehicles here in 2023, down 37 percent from a year earlier.
Another official from an imported automaker said U.S. carmakers will have no clear breakthrough to tackle the ongoing challenges.
“The falling sales and the macroeconomic uncertainty — represented by the rising dollar — will dampen their year-end earnings result,” the official said. “Given the unfavorable car market sentiment, they will not be able to raise their vehicle prices.”