Nissan Motor Co., Ltd. announced on Thursday that it would pull out its operations from the South Korea market by December after experiencing financial losses due to the COVID-19 pandemic and a persisting anti-Japanese outlook in the country.
In a statement, the Japanese automobile manufacturer said that, as part of its business reorganization efforts, Nissan, as well as its premium brand Infiniti, would withdraw from the Korean market.
The carmaker added that due to the worsening market environments both locally and abroad, it concluded that it would be hard to sustain growth in South Korea.
However, the company said it would still carry on its after-sales services for South Korean car owners until 2028.
The decision came after Nissan suffered mostly from weak demand amid the pandemic, as it reported a net loss of 7.7 trillion won ($6.2 billion) for the period of April last year to March this year. In comparison, Nissan posted a net profit of 3.6 trillion won ($3 billion) in the 2018 fiscal year.
According to Nissan, this would be the first time for the company to report a net loss after 11 years since the major financial crisis in 2008.
The company sold only about 4.79 million vehicles last, 13 percent short from its sales in 2018.
Nissan has been in the Korean market for 15 years after launching its Infiniti luxury brand in 2005. In 2008, the automaker also launched mid-size sedans under the Nissan Brand.
Sales Plummet Reasons
In October 2018, Seoul’s Supreme Court issued a ruling that ordered Nippon Steel to pay damages to South Korean wartime labor victims during the second world war. In retaliation, Tokyo imposed stricter restrictions on exports to Korean firms, which led to some Korean consumers to boycott Japanese brands and services.
The boycott resulted in sales starting to plummet for Nissan and other Japanese brands, such as Uniqlo’s sister company GU.
Nissan said it plans to cut its production capacity by 20 percent to yield 5.4 million cars until March 2023. The company also said that it would close its plant located in Spain due to low production rates.
Makoto Uchida, Nissan’s CEO, said that the company would exit South Korea as well as some Southeast Asian markets and concentrate on its primary operations in Japan, North America, and China.