Automotive industry in South Korea
Automotive industry in South Korea
The automotive industry in South Korea is the fifth-largest in the world measured by automobile unit production and the fifth-largest by automobile export volume.
While its initial operations were merely the assembling of parts imported from foreign companies, South Korea is today among the most advanced automobile-producing countries in the world. Annual domestic output very first 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, spectacle, and technology, but also signalling its coming of age.
Contents
Origins Edit
The history of the Korean automotive industry 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 figure made with the sheet metal from a junk oil drum can and military junk Jeep parts to manufacture its very first car, called the Sibal (car). Sibal translates as fresh go or fresh commence.
In order to develop the automobile industry, the Korean government announced an “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 injecting the industry, and the formation of fresh startups. Three companies were established in 1962: Kyeongseong Precision Industry, which switched its name to “Kia Industry”, and began assembling cars in cooperation with Mazda in 1962; Dongbang Automobiles, which was merged with Ha Dong-hwan Workshop and became Ha Dong-hwan Automobile Industry Co. (the predecessor of SsangYong Motor Company) in 1963; and Saenara Automobile, established with the technical cooperation of Nissan Motor Co.; it was the very first automaker in Korea that was tooled with modern assembly facilities, and acquired by Shinjin Industries in 1965. The Asia Motors Company was established in 1965, and the Hyundai Motor Company in one thousand nine hundred sixty eight with the technical cooperation of the Ford Motor Company. However, all these companies were then merely automotive assemblers, importing parts from overseas playmates.
1970 to one thousand nine hundred ninety Edit
In 1970, Toyota began to showcase hesitation in continuing its relationship with Shinjin 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 one thousand nine hundred seventy three in Gwangmyeong, South Korea.
The Hyundai Pony, the very 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 very first when it exported the Pony to South America, in countries like Colombia, Venezuela and Ecuador inbetween one thousand nine hundred seventy six and 1982, making it the very first Korean-developed car to be exported. In 1977, Motores Tecno in Costa Rica, became the very first Hyundai distributor in Central America, where the Hyundai Pony pickup were sold.
In 1982, the Daewoo Group gained control of Saehan Motors, and switched its name to Daewoo Motors in 1983. However, the Korean automobile industry suffered greatly from the one thousand nine hundred seventy nine energy crisis, and the consequent local recession. The government took activity to resolve this difficult situation in one thousand nine hundred eighty two by implementing the “Automobile Industry Rationalization Policy”, the objective of which was to prevent excessive competition inbetween the four major domestic automakers: Hyundai Motors, Kia Industry, General Motors Korea, and Asia Motors. Additionally, the government postponed its import liberalization of automobiles.
Shinjin Jeep Motors, which was a subsidiary of Shinjin Motors, switched its name to Geohwa Co. in 1981, and was taken over by Dong-A Motor Co. (formerly Ha Dong-hwan Automobile Industry 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 the 1980s. Hyundai entered the United States market in one thousand nine hundred eighty six with the Excel (as the Pony was known there), and set a record for selling the most automobiles in its very 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 Ten” 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 one thousand nine hundred eighty nine to produce models, designed in-house and manufactured with its own technology, commencing with the Sonata, a medium-sized sedan. The Sonata, nevertheless, still featured many Mitsubishi designs and parts.
1990 to present Edit
Hyundai’s cumulative exports to the U.S. exceeded one million in 1990. In one thousand nine hundred ninety two its ScoupeTurbo won at the Pikes Peak Hill Climb Rally, and in one thousand nine hundred ninety three 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, albeit primarily well received, gave Hyundai a bad pic, 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 began abandoning their franchises.
Rather than drop out of the world’s largest automotive market, Hyundai began investing strenuously 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 two thousand four the company tied with Honda for initial brand quality, 2nd 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 strongest 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 one thousand nine hundred ninety five the total had enlargened 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 compelled Korean automobile manufacturers to venture aggressively into international markets. In the early 1990s, Daewoo Motors also began to expand strongly via the world. Until 1996, its cars were all based on General Motors’ models. After the Asian financial crisis that began in 1997, it took over the troubled SUV specialist, SsangYong, in 1998, but ran into financial trouble in 1999.
Asia Motors was entirely merged with Kia Motors Company (the fresh name for Kia Industry, switched in 1990) in 1999. Kia Motors had financial trouble in 1997, and helped thrust 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, its car manufacture. began 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 it was renamed Renault Samsung Motors. Samsung also ventured into the intense vehicle market, founding Samsung Commercial Vehicles in 1996, [1] [Two] [Trio] [Four] albeit this 2nd company filed for bankruptcy in 2000, [Four] [Five] [6] [7] ending the liquidation in 2002. [Two]