Honda Korea will end its automobile business at the end of this year. With its market share stuck in the 0% range for a third year, the blow from a strong dollar, due to importing all vehicles from the United States, compounded the situation. It will maintain after-sales service (AS), including vehicle maintenance and parts supply, for at least eight years, and strengthen competitiveness by focusing on motorcycles, which account for about 40% of the domestic market.
On the 23rd at COEX in Seoul, Chief Executive Lee Ji-hong of Honda Korea held a press conference on business operations and said, "As a result of discussions with headquarters executives at the global management meeting held the previous day, we decided to end automobile sales in Korea at the end of this year," adding, "It is the result of comprehensively considering changes in the market environment, exchange rate trends, and other business conditions." It comes 23 years after Honda began its automobile business in Korea in 2003.
The specific timing of the automobile business shutdown has not yet been decided. Lee said, "We plan to begin consultations with dealers next week, but we need to review each dealer's situation and current inventory," adding, "The timing of ending automobile sales may differ by dealer and by region." Honda Korea was said to have notified dealers of the shutdown plan only an hour before the press conference.
Honda Korea's automobile business has effectively lost its presence in the domestic market. According to the Korea Automobile Importers & Distributors Association (KAIDA), Honda Korea's annual sales started at 1,475 units in its first year, 2004, and rose to 12,356 units in 2008, becoming the first in the domestic imported car market to surpass 10,000 units. At the time, Honda Korea's market share among imported cars was 20%. However, sales plunged to 4,905 the following year, and since 2014 its market share has fallen to the 1% range. Since 2023, annual sales have been around 1,000–2,000 units, with market share stuck in the 0% range.
On top of that, the strong dollar also prompted Honda Korea to exit the automobile business. Lee said, "All vehicles sold in Korea are produced 100% at the Ohio plant in the United States," adding, "Until the mid-2010s, the won-dollar exchange rate was around 1,110 won, but the current rate is 20% to 30% higher than that." Lee added, "To overcome the strong dollar, we consistently pursued self-help measures such as expense reductions and changes in the lineup, but the biggest factor in the decision was the need to secure business continuity first."
A backlash is expected from customers who have just purchased Honda vehicles. Honda Korea only about a week ago, on the 17th, began preorders for the large sport-utility vehicle (SUV) "New Pilot Black Edition," among other new models. Lee said, "Starting tomorrow, we will explain the situation to customers waiting for vehicles and follow their preferences on whether to keep or cancel contracts," adding, "For new cars sold from tomorrow, we will work closely with dealers to review what benefits we can offer." Lee said there is no compensation plan for vehicles already sold.
Honda Korea will end the automobile business but keep after-sales service. Lee said, "We will continue after-sales service, including vehicle maintenance, parts supply, and warranty support, and we will respond responsibly to minimize any inconvenience to customers." On the service period, Lee said, "We will maintain it for at least eight years, which is the legal obligation."
There are currently 18 Honda Korea service centers nationwide, including centers and partner shops run by dealers. Lee said, "We will work with dealers so they can continue operating service centers without change, but the number of quick-service centers inside showrooms may decrease," adding, "If a service gap emerges, we will expand a corresponding network to avoid inconvenience." However, Lee said, "We are not considering operating a Honda Korea directly managed service center," adding, "We plan to use existing service partners."
Going forward, Honda Korea plans to focus its capabilities on motorcycles. From April last year to March this year, Honda Korea sold about 43,000 motorcycles, accounting for about 40% of the domestic market. A Honda Korea official said, "We will introduce a diverse product lineup with strong product appeal tailored to customer needs and further enhance service and customer experiences to elevate the unique value of Honda motorcycles."