The US President-elect Donald Trump’s protectionist ideologies have raised concerns for the South Korean auto industry. His recent criticism on cars manufactured in Mexico, which also saw the Japan-based automaker Toyota announce $10 Billion worth investment in the US over the next couple of years may well impact the Korean auto industry’s market share in America.
Toyota made its announcement at this year’s Detroit auto show held annually. The investment is seen as a countermeasure to Trump’s condemnation of the company’s decision to set up a$1 billion plant in the neighboring country. The drop in Toyota’s stock prices is linked to Donald Trump’s recent negative tweet about the Japanese carmaker.
Toyota in one of the leading automotive company in the globe, having a strong presence in the US and claims that the investment is part of a long-term strategy planned to strengthen their presence in America and has nothing to do with Trump’s recently expressed idea to push for higher border tax. The ongoing series of events in the global auto industry has caused a great sense of insecurity within Korean carmakers. The Korea-based Hyundai Motor Company and its sister company Kia Motors are currently operating a 1 trillion won plant in Northeastern Mexico, which is capable of producing nearly 400,000 units. Close to 80 percent of the cars manufactured in the plant is expected to be exported to over 80 countries including the US, leaving the rest 20 percent for Mexico. Currently, the plant produces compact sedan Kia Forte, the company is also planning to add Kia Rio later this year sighting the price competitiveness owing to the North American Free Trade Agreement. Hence, experts believe that Trump might soon target Kia Motors and may question the FTA norms between the US and Korea. This, in turn, may prove devastating for Kia Motors and clearly impact its global sales target for this year. Further, Trump’s recently criticized several other automotive manufacturers for selling cars in the US that are manufactured outside the country, suggesting that they should either pay higher border tax or build their plants in the country.
Summary: South Korean Auto Industry daunted by Trump’s Recent Tweets