Japan’s Carmakers Hike Incentives in S. Korea

Japanese car brands are piling on sales incentives to reverse plummeting sales in South Korea.

Car sales in Korea by Japanese manufacturers, which have been shrinking all year, fell 60% to only 1,100 units in September as the country’s auto market grew 4%, The Nikkei reports. Japanese brands has seen their share of the Korean new-car market plunge to 5% last month from 16% last year.

Demand has evaporated as Korean consumers react to a continuing feud over Japan’s compensation to Korean laborers forced to work in Japan during World War II. Korea’s Supreme Court ruled last year that payments are due. But Japan insists that issues of compensation were settled by a treaty between the countries signed in 1965.

Toyota Motor Corp. is offering low-interest car loans and gasoline gift cards worth as much as 2.5 million won ($2,100). Nissan Motor Co., whose sales in Korea fell 68% last month, is tempting shoppers with fuel gift certificates worth 5.5 million won ($4,700).

Meanwhile, Korean demand for German luxury brands BMW and Mercedes-Benz has surged by about one-third this year to some 12,000 units, according to data from Korea’s Ministry of Trade, Industry and Energy.