South Korea auto industry in 2009
As per reports of Bloomberg, Korea Automobile Manufacturers Association has forecast that in 2009 South Korea auto industry would face tough times as sales are likely to go down. According to their estimate this drop would be worst since 2004.
Korea Automobile Manufacturers Association has said that in 2009 sales of cars would go down by over 10 percent. It is estimated that in 2009 1.1 million cars would be sold in South Korea car market.
Problems for South Korea automobile industry
A number of problems are plaguing South Korea auto industry. Rules and regulations in credit markets of South Korea have been tightened. This has made it tough for consumers to get access to loans that are needed to buy cars. To top it, this Asian country is experiencing economic slump. These factors have brought down demand for cars and this, in turn, has affected both automobile industry of South Korea and its real economic growth prospects in an adverse way.
Some major auto makers who are important parts of auto industry of South Korea have stopped their operations on a temporary basis. They are doing this so that inventories of both car dealers and warehouses across South Korea could be sold.
In last quarter of 2008 sales went down and this led a number of South Korean car companies to sack majority of their employees. Many of these companies are also selling some of their branded products with rebates so that they can regain their production costs and sell more cars. Since new cars are not being made, consumers in South Korea have stopped buying as they assume that prices would go down later. This would enable them to buy cars at lower prices later on.
Governmental aid
National government has provided financial aid to South Korea auto industry in wake of global financial slump. It is also trying to revive confidence of consumers. Rates of lending have been cut down as well with an aim of increasing consumer expenditure. However, as per South Korea auto industry these measures are insufficient. They are requesting to do away with fuel taxes, financially aid car makers and provide funds to industry for automobile loans so that a better position could be achieved.