Automotive industry in South Korea

The Korean automobile industry is currently the fifth largest in the world in terms of production volume and the sixth largest in terms of export volume. While its initial operations were merely the assembling of parts imported from Japan and the United States, Korea is today among the most advanced automobile-producing countries in the world. Annual domestic output exceeded one million units in 1988. In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signalling its coming of age.

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Early beginnings

History of Korean automobile began in August 1955, when Choi Mu-seong, a Korean businessman, and two of his brothers(Choi Hae-seong and Choi Soon-seong), mounted a modified and localized jeep engine on a US military jeep style car body which made with the sheet metal from junk oil drum can and military junk Jeep parts to manufacture its first car, called the Sibal (car). Translates to new go or new start.

In 1960, Sinjin [in English New beginning] Automobiles launched Sinjin Publica under a technical licensing agreement with Toyota. In order to develop the automobile industry, the Korean government announced the "Automobile Industry Promotion Policy" in 1962, and The Automobile Industry Protection Act to protect the infant industry. Foreign automakers were barred from operating in Korea, except in joint ventures with local business entities. The government's efforts led to companies that were established in other businesses entering the industry, and the formation of new startups. Three companies were established in 1962:

The Asia Motors Company was established in 1965, and the Hyundai Motor Company in 1968 with the technical cooperation of the Ford Motor Company.

However, all these companies were then merely automotive assemblers, importing parts from overseas partners.

1970s–1980s

In 1970, Toyota began to show hesitation in continuing its relationship with Sinjin Automobiles. After Toyota's withdrawal in 1972, Shinjin entered into a joint venture with General Motors and formed General Motors Korea, which was renamed Saehan Motors in 1976. Kia opened its Sohari Plant in 1973 in Gwangmyeong, South Korea.

The Hyundai Pony, the first Korean-developed automobile, was built in 1975. Hyundai Motors accomplished this by engaging George Turnbull of British Leyland Motor Corporation as vice-president. The final result was a collaborative effort, comprising:

Hyundai chalked up another first when it exported the Pony to the Republic of Ecuador in 1976, making it the first Korean-developed car to be exported.

In 1982, the Daewoo Group gained control of Saehan Motors, and changed its name to Daewoo Motors in 1983. However, the Korean automobile industry suffered greatly from the 1979 energy crisis, and the consequent local recession. The government took action to resolve this difficult situation in 1982 by implementing the "Automobile Industry Rationalization Policy", the objective of which was to prevent excessive competition between the four major domestic automakers: Hyundai Motors, Kia Industry, General Motors Korea, and Asia Motors. Additionally, the government postponed its import liberalization of automobiles.

Sinjin Automobiles changed its name to Geohwa Co. in 1981, and was taken over by Dong-A Motor Co. in 1985. In 1986, the company was renamed the SsangYong Motor Company.

While localization of auto parts was the major concern during the 1970s, developing mass production system for the export-oriented industry became the issue during 1980s. Hyundai entered the United States market in 1986 with the Excel (as the Pony was known there), and set a record for selling the most automobiles in its first year of business in the United States compared with any other car brand — 126,000 vehicles. Fortune magazine nominated the Excel for the "Best Product 10" award, largely because of its low price. However, the cars were of often low quality and broke down often. This led to Hyundai having a poor reputation in the United States. With this initial success in the export market, the company began in 1989 to produce models, designed in-house and manufactured with its own technology, starting with the Sonata, a medium-sized sedan. The Sonata, nevertheless, still featured many Mitsubishi designs and parts.

1990s and beyond

Hyundai's cumulative exports to the U.S. exceeded one million in 1990. In 1992 its ScoupeTurbo won at the Pikes Peak Hill Climb Rally, and in 1993 its Elantra was selected as the "Best Car of 1993" in Australia. Hyundai's Accent earned Canadian Best Buy Award in 1995, and its Avante also won the Asia-Pacific Rally that year. Yet, amidst all the successes, trouble was brewing for Hyundai.

The Excel, although initially well received, gave Hyundai a bad image, as over time its faults became apparent. Also, in efforts to bring the costs down, its quality and reliability suffered. As time caught up with the poor reputation of Hyundai in the United States, sales dropped drastically, and car dealerships started abandoning their franchises.

Rather than drop out of the world's largest automotive market, Hyundai began investing heavily in the quality, design, manufacturing, and long-term research of its vehicles in 1998, and added a ten-year or 100,000 mile warranty to its vehicles in the United States. This effort paid dividends for Hyundai, and in 2004 the company tied with Honda for initial brand quality, second in the industry behind Toyota, in a survey conducted by J.D. Power and Associates.

Towards the end of the 20th century, however, the industry began to face tremendous pressures at home, with the domestic market growing at under five percent, and greater competition, both locally and abroad. With energy waste, air pollution, and traffic congestion becoming more chronic, the Korean government has imposed the heaviest vehicle excise duty on automobiles and gasoline among the major automobile-producing countries. In 1985, the number of vehicles registered in Korea was one million, but by 1995 the total had increased to eight million. In response to these pressures, Korean automakers have become more aggressive in terms of pricing and quality, and begun developing larger cars, and broadening their product ranges to meet diverse customer preferences.

Internal pressures at home have also forced Korean automobile manufacturers to venture aggressively into international markets. In the early 1990s, Daewoo Motors also began to expand heavily throughout the world. Until 1996, its cars were all based on General Motors' models. After the Asian financial crisis that started in 1997, it took over the troubled SUV specialist, SsangYong, in 1998, but ran into financial trouble in 1999.

Asia Motors was completely merged with Kia Motors Company (the new name for Kia Industry, changed in 1990) in 1999. Kia Motors had financial trouble in 1997, and helped push South Korea into the Asian financial crisis. Kia was subsequently acquired by Hyundai Motors in 1998.

Samsung's entry into the automobile industry was also ill-fated. Established in 1994, Samsung Motors started selling cars in 1998, just when South Korea was hit by the Asian financial crisis. Faced with financial difficulties, Samsung sold a seventy percent stake in the company to Renault in September 2000, and the company was renamed Renault Samsung Motors.

The purchase of Daewoo Motors by General Motors Corporation in 2002, and Hyundai's completion of a one billion dollar assembly plant in Alabama in 2005, are two major developments that will further drive the Korean automobile industry to focus on North America, its largest export market. The move to the U.S. makes Hyundai the sixth Asian automaker to build a U.S. factory, the third foreign maker to pick Alabama, and the sixth automaker to locate in the Southeastern United States since 1990. Now opening in 2009 is another U.S. factory that will be a twin to the Alabama factory. It is located in West Point, Ga and will build KIA cars.

Timeline

1950s

1960s

1970s

1980s

1990s

2000s

List of Korean automobiles

Asia Motors

Asia Motors passenger cars

Hyundai Motor Company

Hyundai passenger cars

Hyundai SUVs and vans

Hyundai commercial vehicles

Kia Motor Company

Kia passenger cars

Kia Motors Group:

Kia Motor Group:

Kia SUVs and vans

Kia Motors Group:

Kia commercial vehicles

Kia Motors Group:

  • KB
  • Rhino/Wide Boxer
  • Trade
  • Boxer
  • AM Truck
  • AM Bus
  • Granbird     
  • Titan
  • Super-Titan
  • Jumbo-Titan
  • Granto
  • Combi
  • Cosmos

Hyundai Motor Group:

GM Daewoo

GM Daewoo passenger cars

Tata Daewoo commercial vehicles

  • Elf
  • Daewoo Truck(8ton~18ton)
  • Daewoo Chasedae Truck
  • Daewoo BM090
  • Daewoo BS090
  • Daewoo BF101/105
  • Daewoo BS105/106
  • Daewoo BV101
  • Daewoo BV113
  • Daewoo BH113
  • Daewoo BH115
  • Daewoo BH115E
  • Daewoo BH116
  • Daewoo BH117
  • Daewoo BH120(H)

Renault Samsung Motors

  • Samsung SV110
  • Samsung Truck

SsangYong Motor Company

SsangYong Passenger Cars

SsangYong Commercial Vehicles

Oullim Motors

See also

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