By Kim Hyun-cheol
Staff Reporter
Endlessly rising raw material costs, combined with an economic downturn, are forcing local carmakers to raise their vehicle prices next month at the earliest.
Leading the move is Hyundai-Kia, the nation's biggest maker, as a couple of its executives have recently hinted at a raise of its products in general.
Lee Hyun-soon, Hyundai Motor's president of research and product, said Wednesday the company is planning for a full-scale markup from next month at a forum held by the Federation of Korean Industries.
"We find it hard to deal with unbearably rising raw materials like steel and plastic," Lee said, also pointing out that global players like GM and Toyota have already gone for a 3.5 percent and 2.5 percent general raise in the United States, respectively.
Another executive, however, said there is still nothing confirmed.
"We feel the need for that due to rising raw material prices. We are thinking about how much and when, but still no conclusion has been made yet," Choi Jae-guk, Hyundai's sales and planning president, said Friday.
The move emerged almost the same time as makers released new editions at relatively cheaper prices with less additional options, including Hyundai's Genesis BH380 Luxury, which went on sale Thursday. The vehicle sells at 46.4 million won ($46,294), 6.2 million won cheaper than its earlier edition, the BH380 Royal.
Considering the time taken for new editions to be out on the market, makers now seem to have decided to look the other way from an earlier stance in price management.
Actually, recent hikes in raw materials are drastic enough to make all makers worried. POSCO has raised the price of its steel products by almost 260,000 won per ton, and glass for automobiles, imported from Japan, has risen by 30 percent.
Hyundai-Kia's move is likely to cause a chain reaction in the domestic market. Renault Samsung Motors, for example, is set to follow suit in the markups at any time, according to its CEO.
"I will just repeat what our CEO has said widely in the press, that the burden of the raw material increase can not be borne only by the car makers and that the prices of automobiles have to be raised," Renault Samsung CEO Jean-Marie Hurtiger said Thursday at a test drive of QM5, the maker's latest model, referring to Renault Nissan Chairman, Carlos Gonn.
"(Regarding Korea,) I think all car makers are debating the need and when it will raise prices. Hyundai-Kia, being the biggest player, will probably be the trend-setters in this matter."
Two other local manufacturers, GM Daewoo and Ssangyong, are also set to join the move. Both companies said they would keep watching other companies, hinting they will also go for a raise in accordance with others.
The overall raise could lead to another controversy over the maker's management scheme. As for Hyundai-Kia, a 1-2 percent raise in all products would lead to additional profit of up to 1 trillion won ($99.8 million) for nothing.