Infiniti leaves Korea
Japanese carmaker suffers significant drop in sales
/NOVOSTIVL/ Japanese carmaker Nissan and its luxury brand Infiniti have decided to withdraw from the Korean market stemming from a series of financial blows, including some Koreans' campaign to boycott Japanese products and the COVID-19 pandemic. This article appeared in Korea Times.
In a press statement released Thursday, Nissan Korea said the company had decided to end its operations in the Korean market by December.
The brand added it will continue to offer after-sales service until 2028. After it began to see faltering sales here, there had been speculation that Nissan would exit, but the Korean unit denied this saying the South Korean market was of strategic importance.
Nissan said the withdrawal was part of reorganization efforts. Nissan CEO Makoto Uchida announced a restructuring plan in Yokohama, Japan, the same day, saying the company will focus on its core operations in Japan, China and North America, and exit South Korea and some markets in Southeast Asia.
The reorganization effort is aimed at reducing fixed costs by about 300 billion yen ($2.8 billion). The restructuring measure comes after Nissan faced a massive loss for the 2019 fiscal year. From April 2019 to March 2020, Nissan shifted to a net loss of 671.2 billion yen from a net profit of 319.1 billion yen in fiscal 2018, mostly due to weak demand after the coronavirus outbreak.
Nissan entered the Korean market in 2005, launching its Infiniti luxury brand. The company also released mid-sized sedans under the Nissan brand in 2008. The combined Nissan and Infiniti brands saw sales peak in 2017, with around 9,000 vehicles sold here.
However, numbers started to plummet last year after some consumers began boycotting Japanese goods and services after Tokyo announced tougher restrictions on the exports to Korean firms of materials needed to make semiconductors and displays.
This move was in reaction to Seoul's top court ruling in October 2018 that ordered Nippon Steel to compensate surviving South Korean victims of forced wartime labor during World War II. The boycott has negatively affected sales of Japanese brands here. GU, a budget fashion brand and sister company of Uniqlo, recently announced the closure of its retail stores in Korea after experiencing a sharp decline in sales due to the boycott and the COVID-19 pandemic.
The brand started operations here just before Tokyo announced the export curbs. However, it remains to be seen how Nissan's exit will affect other Japanese brands such as Toyota and Honda. Toyota and Lexus made aggressive marketing pushes here, providing discounts of up to 4 million won ($3232), zero percent financing and free oil changes.
Also, on the occasion of the opening of the professional baseball league, the auto giant began airing TV commercials on sports channels. According to data from the Korea Automobile Importers and Distributors Association, Japanese automakers sold 4377 cars here in the January to March period, a whopping 62.2 percent decrease year-on-year.
Also, Nissan's car sales dropped 41 percent to 813 in the first quarter from 1,384 during the same period in 2019 while Infiniti's sales plunged to 159 from 759. European and American car brands, on the other hand, saw their sales increase 33.2 percent and 71.4 percent year-on-year, respectively, despite the coronavirus outbreak.
In sales data for April, the five Japanese brands operating here all slipped out of the top 10 best-selling imported cars list. Toyota sold 309 cars, a 62..8 percent decrease year-on-year, Lexus saw a 68.3 percent fall to 461 and Honda took a 68.6 percent decrease to 231.
Nissan and Infiniti sold 202 and 56 vehicles, respectively, falls of 34.2 percent and 73.5 percent.