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Japanese carmakers see operating profits freefall to a tenth

Japanese carmakers see operating profits freefall to a tenth

Posted June. 29, 2020 07:54,   

Updated June. 29, 2020 07:54


As South Korean consumers’ boycott of Japanese products induced by the trade conflict between Seoul and Tokyo led to sharp drops in sales of Japanese cars, Honda Korea suffered a poor operating profit, only a tenth of the previous year's figure. With Nissan withdrawing from the South Korean market, the remaining Japanese car companies including Toyota and Honda are making every effort to win back the hearts of South Korean consumers via marketing and promotion activities.

An audit report of Honda Korea released on Sunday shows that the company’s operating income between last April and this March is about 1.98 billion won, a tenth of 19.61 billion won on a year-on-year basis. Sales decreased from 467.4 billion to 363.2 billion won during the same period. Honda Korea sold 1,323 units between the turn of the year and May, a year-on-year drop of 72.9 percent.

Affected by the boycott campaign against Japan, Nissan Korea decided to leave South Korea after 16 years of business. Nissan and Infiniti sold 1,041 and 222 units, lower by 38.1 percent and 77 percent, respectively, compared to the same period last year.

Japanese automakers saw sales on the increase with their market shares hovering around 20 percent up until the first half of last year. However, they hit some snags due to the boycott movement in the second half of last year. Toyota and Lexus showed a decrease in sales of 56.7 percent and 63.5 percent, respectively, between January and May this year, on a year-on-year basis.

Having said that, some gurus expect that Japanese carmakers will see some recovery from such a sharp drop in sales given that the boycott campaign, which started July last year to slash their sales, induces the base effect and they are eagerly carrying out promotions on new car models. For example, Toyota started the “Fuel Efficiency Race” campaign to promote fuel-efficient hybrid cars and launched a lease program exclusive to corporate bodies.

Do-Hyong Kim dodo@donga.com