Amid a tighter global market and steeper competition between South Korean and Japanese automakers, Japan’s quantitative easing as part of Japanese Prime Minister Shinzo Abe‘s “Abenomics,” will be key to Korean players’ competitiveness next year, industry experts have said.
“Korean carmakers compete with Japanese companies, which means the exchange rate will continue to play an important factor in price competitiveness,” Lee Bo-sung, director of Hyundai’s Global Business Intelligence Center said during the 2018 Global Auto Industry Outlook seminar held Friday at Hyundai Motor Studio in central Seoul.
“High-quality vehicles offered at an affordable price was the charm of cars made in Korea. But with a weaker yen, the price gap between Korean and Japanese cars has greatly decreased.”
Of the 4.5 million vehicles Korea produces, at least 3 million of them are exported.
The Japanese yen is expected to continue to rise to 113 yen against the greenback in 2018, from 111 yen this year, while the Korean won is forecast to drop to 1,105 won per US dollar from this year’s 1,130 won.
Global automotive companies, including luxury brands BMW and Audi, will stick to reducing production cost to invest in future car technology, Lee added.
In terms of ways to tackle unsustainable supply in Korea due to frequent labor strikes, Lee said, “A growing number of countries (importing our cars) are encouraging us to produce them in their countries.”
By Kim Bo-gyung