Nissan, Lexus Sales in South Korea Drop on Islets Dispute

Japan’s Nissan Motor Co. and the Lexus brand at Toyota Motor Corp. saw August sales plunge in South Korea as tension between the two countries escalated over disputed islets.

Shipments to South Korea for Lexus, the luxury brand of Asia’s biggest carmaker, plummeted 39 percent last month compared with a year earlier, according to data on Korea Automobile Importers and Distributors Association’s website. Nissan’s plunged 71 percent and its luxury brand Infiniti’s fell 50 percent.

Total sales of Japanese carmakers in South Korea dropped 12 percent and importers attributed the decline to the dispute, according to the Korea Chamber of Commerce and Industry’s e-mailed statement. Of the surveyed importers, 26 percent said the dispute over the islets affected sales and 81 percent said shipments will be hurt if the tension persists.

The two countries’ dispute over islands known as Dokdo in Korean and Takeshima in Japan have escalated since South Korean President Lee Myung Bak visited them on Aug. 10. Of about 500 companies that have business ties with Japan that were surveyed by the Korea Chamber of Commerce and Industry, 65 percent have said they will suffer if the dispute drags on.

“If the tension further heightens or if the dispute prolongs, I think we can expect a significant drop in sales,” said Mitsushige Akino, who oversees the equivalent of $600 million in assets in Tokyo at Ichiyoshi Investment Management Co. “Still, compared to China, the sales volume of Japanese automakers in South Korea wasn’t very big to begin with, so the overall impact on the companies may be minimal.”

No Japanese carmaker manufactures in South Korea. Japanese cars made up 15 percent of imports in South Korea in August. Imports made up 9.9 percent of total sales, according to the association.

Toyota hasn’t seen a “major impact” on South Korea sales from the political situation, company spokesman Joichi Tachikawa said. Nissan, Japan’s second-biggest carmaker, isn’t aware of any impact on South Korean sales from the dispute, said Chris Keeffe, spokesman for the Yokohama City, Japan-based carmaker. Both said their companies aren’t cutting back on marketing activities in South Korea, though individual dealerships may make their own adjustments.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE