Korean Automotive Industry in Transition
Korean automotive industry drew world's attention as it grew to be the 5th largestproducing country in two decades as a later comer. Now it faces a transitory period asdomestic mmket growth drops to less than 5% despite more rapidly increasing overcapacityand it has to cope with greater competition pressure in both domestic andoverseas markets. Change in domestic market directs Korean manufacturers in two ways:to develop more of larger cars and various types of vehicles like RVS to meet customers'preferences and to raise their competitiveness in price and quality to surviveunprecedented power struggle among new and incumbent players. It also has to paymore heed to social voices. Energy waste, air pollution, and traffic congestion are gettingmore chronic in Korea. To alleviate these problems Korea imposes the heaviest taxes onautomobiles and gasoline among major automobile producing countries.Entering the '90s, exports of Korean-made cars rose rapidly for several reasons. Amongthese were redoubled efforts to control quality, expansion of after sales service networks,production of a wider range of export models, and more aggressive marketing efforts.Perhaps most importantly of all, however, the rapid rise was also due to aggressiveefforts by Korean manufacturers to explore overseas markets. Korean-made cars are nowbeing exported to a greater number of countries than ever as a result, especially todeveloping countries. The volume of exports did in fact rise substantially as exportmarkets became diversified, but the growth rates between regions has varied far toogreatly. This indicates that Korean manufacturers have not yet secured competitivenessoverseas. The rise in exports of Korean-made cars was greatly influenced by externalfactors such as the appreciation of the Japanese Yen.The trade imbalance of Korean auto industry drew attention from advanced countries.After successive reductions, the tariff rates on imported cars in Korea now stand at 8%,which is an even lower level than in the EU. In the wake of the trade negotiations betweenKorea and the US in 1995, foreign auto manufacturers were given wider access to theKorean market.Korean auto manufacturers have been aggressive in recent years in expanding theiroverseas operations. Each manufacturer is pursuing different strategies to advanceoverseas to build local production operations.
Year of publication: |
2002-07-18
|
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Authors: | Daechang, Lee |
Subject: | domestic markets | korean | transitory |
Saved in:
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