This study surveys the present status of the Korean automobile industry, with a focus on identifying and prioritizing the tasks that the industry will need to fulfill in response to the changing structure of comparative advantages worldwide. The purpose of this study, in other words, is to prompt a serious debate on the new policy measures required for the industry, while also highlighting the need for automakers to establish new strategies for competition. The Korean automobile industry consists of five manufacturers of finished cars; 1,193 first-class subcontractor manufacturers of automotive parts; and over 4,000 second-class subcontractor manufacturers of automotive parts. As of 1985, the industry’s output began to grow exponentially. Notwithstanding the rapid development and expansion, however, the Korean automobile industry still lags far behind the automobile industries of the advanced economies worldwide in terms of both productivity and technology. The appreciation of the Korean won (KRW) and the rising wages in Korea add to the complexity of the changing environment of international competition that the Korean automobile industry faces today.
The worldwide automobile market is witnessing increasingly fierce competition among American, Japanese and European automakers that divide the market three ways. With more and more automakers from developing countries, including Korea, also entering the market, the competition is likely to become far more intense in the near future. Growing competition, on the one hand, forces companies to lower their prices and improve the quality of their products, while also developing innovative production techniques, new materials and other features to improve performance. Increasing regulations designed to limit carbon emissions have also led automakers to become more and more competitive about their engines and to develop new and more efficient models. The opening of the Eastern Bloc and the Russian market will further boost the demand for low- to middle-end models. All these conditions favor the Korean automakers that are relative latecomers to the international market. On the domestic front, there is already an explosively growing demand for cars thanks to the general rise in the income level. Korean automakers will therefore face increasing competition among themselves throughout the 1990s.
The Korean automotive industry needs to focus on developing, producing and exporting high-performance cars in the future. While their eyes are set on quality improvement in the long run, they also need to focus, in the short to intermediate run, on developing and exporting affordable cars. In order to maintain and improve the price appeal of their products on the international market, the Korean automakers need to localize the engineering technology, make significant improvements to the manufacturing process, achieve automation, rationalize management and production control, improve the parts delivery system and localize the development and production of automotive parts. These tasks must be fulfilled in order to lower the production cost and improve the quality of the finished product.
자동차산업 경쟁력의 실태와 전망(Present and future prospects of Korea’s automobile industry)
|Series Title; No||정책연구시리즈 / 91-21|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Manufacturing|
|Holding||KDI; KDI School|