Obama Effect Works Against US Dealers
By Kim Hyun-cheol
Staff Reporter
The Obama 'effect' is being felt among dealers of Detroit's Big 3 ― G.M. Ford and Chrysler. They fear a move by President Elect Obama to protect troubled American carmakers at the expense of Korean carmakers may backfire, bringing further chills to their sales.
"We don't deal with politics, so we have nothing to say about the issue," a spokesperson at Chrysler Korea said Tuesday. She implied its U.S. headquarters asked the Korean unit to avoid presenting particular opinions.
A G.M. Korea official wondered why Obama was pushing to renegotiate a free trade agreement signed with Korea, adding that he may have misjudged the situation, being exposed to limited statistics.
"Even the FTA effectuation doesn't do much good for U.S. makers here except for some price cuts of products. We don't expect it to significantly boost our sales," he said.
The company was quoted as saying to Yonhap News Agency that it was concerned about the negative effects of Obama's remarks on its sales, but later said the quotation was misrepresented.
Obama has been consistently criticizing the FTA between Korea and the United States, which is described as being "badly flawed.''
Korean makers sold over 770,000 vehicles in the United States last year, while American carmakers sold little over 6,000 in Korea, according to statistics by industry groups here.
Under the FTA, the two countries agreed to phase out tariffs on automobiles, while Korea pledged to revise its tax system for larger vehicles, which has been called "discriminatory" by Washington.
During their talks Monday, Obama urged President Bush to support an immediate emergency bailout for carmakers.
U.S. stock markets, however, are turning a cold shoulder to the auto industry.
GM shares tumbled 23 percent at the U.S. bourse Monday, after the company announced Friday it was about to hit the ``danger point'' in its cash reserves.
Some Wall Street analysts even predict its shares may not rebound for years even if the U.S. government offers aid to the ailing automaker.
U.S. automakers have been struggling in the Korean market. They combined to account for almost half of the imported vehicle market in the 1990s but their market share has declined ever since, accounting for just an 11.7 percent share last year.