Auto Shares Plunge on Trump Election Win

  • By Shin Eun-jin

    November 11, 2016 13:14

    The victory of U.S. president-elect Donald Trump has sent shares of Hyundai and affiliate Kia shares into freefall for two days running.

    The stock's performance contrasted starkly with Samsung Electronics and SK Hynix, which both rebounded on Thursday.

    Some industry watchers believe Korea's car industry stands to suffer the biggest impact from a Trump presidency, but others say the real estate mogul is unlikely to make good on his stump braggadoccio.

    The trouble is that Kia has a production plant in Mexico, which started operations in May. Capable of producing 400,000 automobiles a year, the idea was to sell them to the U.S., but Trump's talk of building a wall and slapping a 35-percent tariff on cars from Mexico and Canada has sent jitters through the firm.

    "The output capacity of the U.S. manufacturing plant has reached its saturation point, while wages have also risen so the Hyundai-Kia group built a factory in Mexico in order to keep manufacturing costs down," said Kim Ki-chan at Catholic University. "If Trump applies tariffs on Mexico, the impact will be huge."

    Last year, U.S. sales accounted for 21.4 percent of Hyundai's total sales and 15.7 percent for Kia.

    But other analysts believe Trump will fail to realize his campaign pledges. Detroit's Big Three automakers -- GM, Ford and Chrysler -- all have production plants in Mexico.

    "If Trump slaps high tariffs on Mexican-made cars, U.S. automakers stand to suffer the most, so I wonder if he will actually follow through on his campaign pledge," said Lee Jong-gon at the Washington office of the Korea Trade-Investment Promotion Agency.

    Meanwhile, GM said Wednesday that it plans to lay off more than 2,000 workers at two plants in the U.S. The Financial Times reported that GM has sent a clear message it will not repatriate jobs from its assembly lines in Mexico to the U.S. as Trump has been demanding.

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