Korean automakers feared to face drop in exports to Brazil

SEOUL, Oct. 12 (Yonhap) -- South Korean automakers, led by Hyundai Motor Co. and Kia Motors Corp., are expected to see their exports to Brazil drop on the South American country's recent steps to shield its manufacturing industry from a strong currency, Seoul's trade ministry said Wednesday.
Brazil said last month it will raise a key tax on industrial products for automakers whose vehicles do not have at least 65 percent of their components produced locally by 30 percentage points, in an attempt to discourage imports and stimulate domestic production.
The tax hike is temporary and effective through the end of next year.
"Exports by Hyundai and Kia to Brazil are likely to decline 40 percent," Lee Si-hyung, deputy trade minister, said in a weekly briefing.
Hyundai sells some 80,000 units in Brazil and Kia some 60,000 vehicles on average each year.
Hyundai Motor is building its first South American auto manufacturing plant in Brazil to benefit from the fast-growing vehicle market there. The plant will have a capacity of 150,000 units and is expected to be completed by the end of 2012.
Meanwhile, the deputy minister said Brazil is expected to take additional measures to protect its manufacturing sector from massive cheap imports.
Many nations are taking protectionist measures at a time of global economic turmoil, he said.