South Korea's auto industry is facing increasingly tough times due to the strong won, high oil prices and sluggish domestic consumption, an executive of the biggest carmaker said Friday.
“The environment surrounding the South Korean auto industry is increasingly deteriorating,” Hyundai Motor vice-chairman Kim Dong-Jin told a conference hosted by the Federation of Korean Industries.
“There are big risk factors going forward such as a strong won, a weak yen, higher oil prices and a downturn in domestic consumption,” Yonhap news agency quoted Kim as saying.
Hyundai, which with affiliate Kia Motors is the world's sixth-largest automaker, said the company's sustainable growth is being threatened by unlimited global competition and growing safety and environmental regulations.
In addition to the won's strength against the dollar and a rise in raw material prices, the weak yen is fuelling exports by Japanese rivals Toyota and Honda.
Hyundai also faces falling productivity, labour dispute and shrinking profits. Net profit plunged 34 percent to 1.53 trillion won (1.63 billion dollars) last year due to strikes and the won's rise.
The firm faces another possible stoppage after wage negotiations broke down Friday. The company and its 44,000-strong union have held 10 rounds of negotiations since July 12 but failed to narrow differences.
“Talks failed as the union turned down the management's offer,” said company spokesman Kang Hyun-Geun.
A union official, speaking on condition of anonymity, told Yonhap it is likely to apply to the government's labour committee early next week for permission to stage a stoppage.
Under labour laws a union must notify the committee 10 days before launching a strike.
On Friday Hyundai offered a 5.4 percent rise, or 78,000 won (83 dollars), in monthly basic salary — compared with an 8.9 percent increase, or 128,805 won, demanded by the union, according to the official.
The union was also demanding Hyundai pay 30 percent of its 2007 net profit as a bonus for union members. In contrast, Hyundai offered to pay a bonus equivalent to three months' salary, the official said.
Last year employees stopped work for a total of 33 days, causing 1.3 trillion won in lost sales, according to the company.
So far this year a 13-day partial strike over a bonus dispute and protests against a free-trade deal with the United States have cost 336 billion won, according to the firm's figures.
