GM’s chief executive in South Korea urged the government to act against the increasing currency, as the weakening yen affects the competitiveness of South Korean exports.
Sergio Rocha, head of GM Korea, said that Park Geun-hye, South Korea’s new president, could help automakers by imposing “a policy that favors on the foreign exchange, like both neighbors.” Since May 2012 the South Korean won has increased by 6% compared with the US dollar and 27% against the yen.
“On our left and right side, they do things to support their own industry, to allow them to export – both China and Japan,” Mr Rocha said.
Analysts say that automakers will be the most affected by the increasing currency, now watching how Honda and Toyota benefit from the dramatically weak currency. Hyundai and Kia predict sales will increase only by 4% this year, as their plans to gradually raise the price of their vehicles have been complicated by the currency concerns.
“The Korean won is moving in the wrong direction . . . and if the exchange rate starts losing its competitiveness, it affects our business,” said Sergio Rocha, head of GM Korea.
Due to the won’s strength many major foreign investors have stepped aside the South Korean market, which led to a Won2.1tn so far this year.