SEOUL — Global auto sales for South Korea’s Hyundai Motor fell to their lowest in a decade in February as coronavirus worries kept buyers away — the first major indicator of damage to business in the broader auto sector due to the epidemic.
South Korea’s Hyundai, which together with affiliate Kia Motors is the world’s No.5 car maker, is the first major automaker to announce sales for the month. Chinese and U.S. players will turn in their numbers in the coming weeks.
Hyundai reported preliminary sales of 275,044 vehicles for February, down 13 percent from a year ago, with domestic sales plunging 26 percent. It last reported monthly sales lower than this in February 2010. Kia reported a 5 percent drop in global sales.
South Korean automakers have been bracing for weaker demand since the roll back in tax cuts on passenger cars at the start of the year, but the coronavirus outbreak has made it tougher to do business, analysts said.
“People are afraid because of the coronavirus and no one is going out … dealership traffic itself is almost zero,” said Esther Yim, an analyst at Samsung Securities.
“Since people don’t tend to place orders for cars that they haven’t seen over the phone, until the virus dies down somewhat, domestic sales will continue to be affected.”
Yim also pointed out that demand was dismal in the world’s top auto market of China, where the virus originated.
“In China, I believe around 80 percent of Hyundai dealerships did not operate in February. China isn’t completely free from travel restrictions yet, so it’s going to be bad until April.”
China is one of Hyundai’s key overseas markets.
Feeling the heat
The flu-like virus has killed nearly 3,000 people, mostly in China, and roiled global financial markets as investors and policymakers brace for a steep knock to world growth. South Korea has the most number of infections outside the mainland.
In South Korea, the cases are concentrated in the fourth-largest city of Daegu and the North Gyeongsang province, home to about 20 percent of auto parts suppliers in the country, Statistics Korea data shows.
The coronavirus is already weighing on the broader South Korean economy. A private survey showed the country’s factory activity shrank faster in February as export orders contracted at the quickest pace in over six years.
Hyundai flagged a hit to its manufacturing from the virus early last month when it halted production at home, its biggest manufacturing base, due to a shortage of parts from China.
While it has gradually resumed output, virus-related uncertainties remain. Last week, a worker at its factory complex in the southeastern South Korean city of Ulsan tested positive for the virus, prompting it to shut a factory.
The plant, which makes popular models such as the Palisade crossover, resumed production on Monday, a Hyundai spokesman said.
