GM Calls on South Korea to Address Won Strength Amid Export Concerns
GM Korea’s chief executive has urged the South Korean government to intervene on currency policy, warning that the strong won is hurting automotive exports as rivals in Japan and China benefit from weaker currencies.
General Motors has called on the South Korean government to take action over the strengthening won, warning that the currency’s rise is eroding the competitiveness of Korean-built vehicles in export markets. Sergio Rocha, president and CEO of GM Korea, said in early April 2013 that both Japan and China have adopted currency policies that favour their own industries, leaving Korean manufacturers at a disadvantage.
Rocha’s comments came as the won continued to climb against major currencies. Since May 2012, the won had gained 6% versus the US dollar and 27% against the Japanese yen. This shift has made South Korean exports, including vehicles from GM Korea, Hyundai and Kia, more expensive in overseas markets, while Japanese manufacturers such as Toyota and Honda have gained a pricing edge due to the weaker yen.
Pressure on South Korean automakers
The won’s appreciation has put pressure on South Korea’s major carmakers. Hyundai and Kia, which together account for the majority of the country’s automotive exports, have forecast sales growth of just 4% for 2013. Plans to gradually increase vehicle prices have been complicated by the currency’s strength, which makes Korean cars less competitive abroad and squeezes profit margins on exports.
Analysts point out that Japanese rivals are already benefiting from the weaker yen, gaining ground in key markets where pricing is critical. The situation has raised concerns not only among manufacturers but also among investors. Foreign investment in South Korea has slowed, with reports of capital outflows totalling 2.1 trillion won in early 2013 as the currency’s strength deters overseas buyers.
GM Korea’s position and industry context
Rocha urged president Park Geun-hye’s administration to consider policies that would support the country’s export industries, pointing to China and Japan as examples of governments actively managing their currencies. He argued that without intervention, South Korean automakers could lose further ground in global markets. The issue of currency intervention is sensitive, with governments wary of accusations of manipulation, but the pressure from exporters is mounting as the won’s rise continues.
What it means for workers and suppliers
The currency situation has practical consequences for South Korean automotive workers and suppliers. If export margins shrink, manufacturers may look to cut costs, delay investments or reconsider production volumes. While there has been no immediate announcement of job losses, continued pressure could affect employment and supplier contracts if the won remains strong against rival currencies.
The debate over currency policy is set to continue, with automakers, suppliers and government officials all watching exchange rates closely as they weigh the best response to shifting regional competitiveness.
