Korea's Car Production Plummets
11 November, 2019
Korean automakers are expected to produce fewer than 4 million cars this year for the first time since the global financial crisis in 2009.
According to the Korea Automobile Manufacturers Association on Sunday, the country's five automakers produced 3.27 million vehicles from January to October, down 0.4 percent on-year. Their monthly average production has been below 320,000 cars this year.
The reasons are sluggish sales in China and the U.S. by Hyundai and Kia, the two major automakers that account for some 80 percent of Korean production, and a crisis facing the three minor players -- GM Korea, Renault Samsung and Ssangyong.
Hyundai and Kia focused on sales in Korea and newly emerging economies with an aggressive marketing strategy to make up for their poor performance in China. As a result they sold 1.46 million and 1.18 million cars so far this year, up 4.5 percent and 0.8 percent. But their increased sales at home meant a much narrower market for the other three.
Renault Samsung's sales plunged 24 percent on-year to 144,727 cars in the first 10 months because it stopped making the Nissan Rogue SUV in September. The Rogue used to take up about half of its total production.
GM Korea, which has accumulated debts of W5 trillion over the past five years, sold 339,106 cars, down 11.1 percent (US$1=W1,158). This was because it lost its competitive edge compounded by a strike in September. Ssangyong, which has been in the red for the 11th quarter running, sold 109,162 cars, down 4.9 percent.
"Global demand began to fall last year, but here it has been falling since 2015," said Lee Hang-koo of the Korea Institute for Industrial Economics and Trade. "The reason was the dwindling competitiveness of the Korean auto industry. There's no other choice but drastic restructuring."
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