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Interesting factors of global car market

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Hyundai has been hurt by its union and strengthen won
Hyundai has been hurt by its union and strengthen won

In the past few years, foreign car companies, such as Hyundai, have been expanding into the U.S. market. However, a recent situation for Hyundai does not look positive. Hyundai’s profit dropped about 15% in the first quarter.

BBC news suggests that industrial action and the strength of the won (Korean currency) are the main reasons for this drop. When an international currency appreciates against the US dollar or it grows in value, the company’s products become less in price competition. So in this case, the strong won made Hyundai less competitive compared to other car companies such as Toyota. It can hurt Hyundai badly because most of their products are made in South Korea.

Also, unions factored into their loss of profit. This can be a political issue but just by considering Hyundai’s recent performance, the unions and the company should negotiate quickly. This situation clearly shows how unions can also affect company’s performance.


One Comment

  1. Good to pick up the forex angle, as per class today where we looked at the yen/dollar rate. Of course both Kia and Hyundai now have capacity in the US, providing insulation, however partial. But there’s also the newcomer issue: picking up share from a low level vs growing further.

    April 30, 2013

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