2013-12-29 18:28:42 - New Transportation research report from Business Monitor International is now available from Fast Market Research
According to the Korea Automobile Manufacturers Association (KAMA), September 2013 domestic vehicle sales tumbled 12.6% year-on-year (y-o-y), to 101,846 units, bringing sales for the first nine months of 2013 to 1,014,184 units, a decrease of 0.6% y-o-y.
As our bearish view plays out, we are happy to maintain our full year vehicle sales growth forecast at -1.2%, to 1.4mn units.
Despite the domestic market remaining in the doldrums over the past few years, it has been our long-held view that the imported vehicle segment will remain a bright spot and be able to grow its market share at the expense of domestic brands. Indeed, imported vehicle sales have been growing since March 2012, with certain months enjoying high double-digit y-o-y growth. .
to the decline in sales, auto production contracted 16.2% y-o-y in September, to 287,978 units. This was the worst monthly performance since August 2012. The dismal production figures were attributed to a few reasons - the reduced working days in September due to the mid-autumn festival holidays, the partial strikes that took place at Kia's factories as well as weak exports.
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BMI has long been bearish on Korean auto production due to rising wages and increasingly frequent labour strikes carried out by carmakers' labour unions with the aim of pressuring the management of companies to meet their aggressive demands.
September's production figures have brought auto production for the first nine months of the year to 3,249,862 units, a decrease of 2.1% y-o-y. According to KAMA, passenger car production for the first eight months of 2013 (latest data available) came in at 2,708,464 units and are firmly in line to meet our full year car production growth forecast of -3.0%, to 4.042mn units. Similarly, our 2013 commercial vehicle (CV) production growth forecast of -1.7%, to 384,000 units is well placed and this makes us happy to stand pat on our 2013 total vehicle production growth forecast of -2.9%, to 4.426mn units.
Export Growth Falling Due To Weak CEE Demand
The continued strength in the Korean won has definitely been a headwind for the auto sector's exports. Vehicle exports in September 2013 tumbled 18.9% y-o-y, to 187,405 units, also the lowest monthly figure since August 2012. However, we believe the more important factor responsible for the collapse in vehicle exports has been the weak demand in the export markets of South Korean manufacturers. The CEE region is an important market for Korean exports and anaemic demand in many of the CEE countries explains some of the drastic fall in exports (see 'CEE Sales To Remain Weak', November 20).
We remain downbeat on exports growth and the 4.6% y-o-y decline in 9M13 export units attests to our view
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