Local newspaper reports say that foreign automakers importing into South Korea are notching up losses on the back of an appreciating euro that is hitting margins.
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The deteriorating balance sheets for overseas carmakers came as they rapidly cut prices amid intense competition in the market, reports say.
Sales of imported vehicles account for some five percent of the South Korea’s 1.2m unit market.
Loss makers include BMW and GM. BMW swung to a net loss of 5.4 billion won (USD5.5m) last year on sales of 462.2 billion won, the company’s Korean unit said in a regulatory filing to the financial regulator.
It’s the first time BMW, the best-selling foreign brand last year, reported a net loss in four years.
“As the euro currency strengthened last year, so did the costs,” said an official at BMW’s Korean office, according to Asia Pulse.
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By GlobalDataThe BMW official said the company’s aggressive price-cut policy also contributed to the losses.
BMW, which has been more aggressive than the others in reducing prices to compete with Japanese brands such as Toyota Motor Corp.’s Lexus and Honda Motor Co., cut the local retail price of its 525i sedan by nearly 20 million won last year, the report said.
The Korean sales unit of General Motors Corp. also widened its net loss to 2.5 billion won last year, compared with a loss of 2 billion won in the previous year.
Chrysler’s Korean unit reported an operating loss of 1.01 billion won last year as sales fell 1.2 percent, according to the company’s regulatory filing.
