Japanese carmaker Mazda has reportedly scrapped its plan to advance into the Korean market after an internal assessment found that the strengthening Japanese yen exchange rate could reduce its potential profits by 10 percent.

According to newspaper Asia Today, Mazda has recently withdrawn the plan to sell more than 5,000 units -- mostly sport utility vehicles such as the CX-5, alongside sedans Mazda 3 and Mazda 4-- here after partnering with an official Korean importer within this year.

The soaring yen is blamed as the major culprit. As of Friday afternoon, it was 1,072.82 won (89 cents) per 100 yen, up nearly 20 percent from 890.75 won per 100 yen on June 3.

“Mazda contemplated raising the cost, insurance and freight, but Korean importers backed out. Mazda concluded that this is not the right time,” the newspaper quoted a source as saying.

However, the price of Japanese cars here will remain immune from the strong yen effect for a while, as importers have decided to “watch how things go.”

“The pricing policy is an extremely delicate matter because it could shake the trust between the brand and consumers. It will be difficult to raise the price based on a short-term report,” an industry insider said. “Prices are usually adjusted when a face-lifted or revamped model is launched, or a revised tax is adopted,” he added.

Moreover, Toyota and Nissan announced that they will subsidize 200,000 won to 1 million won off the price tag until June, following the Korean government’s decision to extend individual consumption tax deductions. “We will seek for a competitive price on the 2016 New Generation RX that is scheduled to be launched on Feb. 17,” a Lexus spokesman said.

By Bae Ji-sook 
(baejisook@heraldcorp.com)