Business / Corporate

Amid growing diplomatic row, sales of Japanese cars in South Korea slump

Reuters

Sales of Japanese-brand autos in South Korea slumped in July amid the worsening diplomatic row that has led to consumer boycotts and efforts by Seoul to cut the economy’s reliance on imports from Japan.

Industry data out of South Korea on Monday showed Toyota Motor Corp. sales tumbled 32 percent from a year earlier and Honda Motor Co.’s sales skidded 34 percent.

Although automakers are still assessing the main factors driving the declines last month, industry participants worry declining sales will continue in August as diplomatic tensions grow.

Japan tightened controls in July on exports to South Korea, escalating a row over wartime forced laborers and sparking a boycott by South Korean consumers of Japanese products and services, from cars, beer and pens to tours.

On Friday, Japan escalated tensions by removing South Korea from a list of export destinations approved for fast-track status.

“Showroom visits are declining while consumers are holding off on signing contracts,” a Honda Korea official said, asking not to be identified because of the sensitivity of the matter.

A Honda Korea spokesman said the automaker needs to assess the reason for the July sales fall and whether it is related to Japan’s export curbs, or summer holidays. A Toyota Korea spokeswoman declined to comment on the drop.

The data from the Korea Automobile Importers and Distributors Association also showed that Lexus, South Korea’s third-most imported car brand after Mercedes and BMW, logged a sales drop of 25 percent from the previous month, although that was still up 33 percent from the previous year.

The government said Friday it will “step up safety measures” on Japanese tourism, food and waste, without elaborating further.

While foreign-branded cars make up a small portion of domestic auto sales in South Korea, the business community is concerned a consumer swing away from Japanese imports for political reasons could spread to other parts of the retail market.

Asahi Group Holdings, whose Asahi Super Dry is the most popular import brand in South Korea, said Thursday the spread of the South Korean consumer boycott of Japanese goods is affecting its beer sales as it lowered its profit guidance slightly.

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