You can add the risk of U.S. tariffs to the welter of worries hanging over South Korea's car industry.
The country has mostly managed to avoid attracting the ire that President-elect Donald Trump has directed at Beijing's trade policies, but there's plenty of reason to worry that may change.
As a percentage of gross domestic product, its current account surplus is about three times larger than China's, and the International Monetary Fund reckons it has one of the world's most undervalued major currencies.
Two local think tanks have warned South Korea may be labeled a currency manipulator by the U.S. Treasury Department, along with China. If President Trump used that designation to impose import duties on Beijing, as he's threatened, Seoul would be lucky to escape unscathed.
That's just the start of it.
Sales in the U.S., the second-biggest market for Kia Motors Corp. and fourth-largest for Hyundai Motor Co., appear to be stagnating. December figures reported by Bloomberg News showed that of eight carmakers surveyed, seven beat analysts' sales estimates for light vehicle sales. Hyundai and its affiliate Kia were the only ones to fall short, with combined sales down 0.9 percent from a year earlier in defiance of a forecast 5 percent increase.
Hyundai should shoulder most of the blame. Sales have been stuck between 700,000 and 800,000 for five straight years, and its U.S. Chief Executive Officer Dave Zuchowski abruptly left the company in December. (Automotive News said he'd been fired for failing to meet sales targets, without saying where it got the information.)
Don't hold out too much hope that Kia will be able to ride to the rescue, though. While it's been the growth engine for the chaebol in the U.S. -- increasing sales about a third from 485,000 in 2011 to 648,000 last year -- it faces the far bigger threat from the election of Trump.
Kia's manufacturing plant in Georgia has been running at capacity for four years straight, but struggles to assemble more than about half the vehicles the company sells to U.S. drivers. That's left the market dependent on costly imports from across the Pacific, where Kia still assembles more than half its global fleet. The solution? A new $3 billion production line, capable of supporting 14,000 jobs and adding an extra 400,000 vehicles a year when fully up and running.
There's just one catch. The new plant -- opened two months before the U.S. election last year -- isn't in the deep-red, deep-south territory where the Hyundai chaebol's other American plants are based. It's in Mexico.
Gadfly has previously argued that Kia's excellence in manufacturing vehicles isn't matched by sufficient elan in advertising and selling the things. Right now, though, it has a bigger problem: How to meet demand in its second-biggest market from Asian and Mexican factories without attracting policy-making by presidential tweet.
Staying out of Trump's line of sight has served Korea's carmakers rather well so far -- so they'd be wise to keep things muted next month, when Hyundai ads are likely to be blazoned all over the Super Bowl. If the two companies want to remain outside the firing line, keeping a low profile might be a good idea.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
(Corrects Hyundai annual unit sales figure in seventh paragraph.)
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