] Concerns are growing over the possibility of US President-elect Donald Trump affecting South Korea’s auto industry through protectionist measures against cars made in Mexico, following Japanese auto brand Toyota’s announcement to invest $10 billion in the US over the next five years.
Toyota’s announcement at the Detroit auto show on Jan.9 came four days after Trump posted a tweet over the manufacturer’s decision in April 2015 to build a $1 billion plant in Guanajuato, Mexico.
Following the tweet on Jan.5, Toyota’s stock price dropped 0.67 points to a low of $120.45 on the New York Stock Exchange.
According to Toyota, the No. 1 automobile seller in the US, the investment is irrelevant to Trump’s push for heavier border tax, while Japan’s Kyoto News Agency viewed the firm’s move as a countermeasure.
The series of events in the global auto industry is causing jitters in Korea’s auto industry.
Since September last year, Kia Motors, the sister company of Hyundai Motor, has been running a 1 trillion won plant in Northeastern Mexico. It has the capacity to produce 400,000 units.
The automaker had initially planned to export 80 percent of the cars made at the Mexico plant to the US and some 80 countries, and to sell the rest in Mexico.
The plant currently produces the compact sedan Kia Forte, also known as the K3, with the Kia Rio scheduled to join production this year based on price competitiveness guaranteed by the North American Free Trade Agreement.
“We can’t rule out the possibility that Trump may go after Kia Motors, casting doubts about the FTA between Korea and the US,” said Kim Pil-soo, a professor of automotive engineering at Daelim University.
“If Kia becomes an open target, its Mexico plant will be dealt a blow. Ultimately, Kia may not be able to reach its global sales goal to sell 8.25 million units in 2017,” Kim added.
Kia Motors spokesperson said nothing has been decided regarding the Mexico plant and that it will come up with an action plan when Trump rolls out policies as US president.
Trump recently took to Twitter to criticize global automakers for selling automobiles made abroad in the US, stating they should either build a plant in the US or pay a “bigger border tax.”
In particular, he has targeted Toyota, Ford and General Motors.
US-based Ford on Jan. 3 announced the cancelation of its plan to build a $1.6 billion factory for small cars in Mexico, while Fiat Chrysler on Jan.8 said it will create 2,000 jobs in Ohio and Michigan by producing three new Jeeps.
By Kim Bo-gyung/The Korea Herald (email@example.com