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World’s Fifth Biggest Producer of Finished Vehicles and Competitive Automotive Parts Industry Close

World’s Fifth Biggest Producer of Finished Vehicles and Competitive Automotive Parts Industry

Ranked fifth in the world and boasting an annual production capacity of more than 4 million vehicles, the Korean automotive industry is rapidly responding to paradigm shifts such as electrification, autonomous driving, and mobility services. In particular, the auto industry is quickly incorporating batteries, IT and other technologies and enjoying strong growth.

In 2021, ten Korean auto parts companies were listed on the world's top 100 automotive parts producers in 2021 (by sales). The ten companies achieved sales of USD 65.1 billion, accounting for 8.2% of the sales of top 100 parts producers. Compared to 2020, one more Korean parts producer joined the top 100 list, and the share of Korean auto parts producers' sales increased by 0.8 percentage points. The figures indicate that as the global demands for vehicles start recovering from COVID-19, Korean companies have been able to normalize production faster than their competitors. Moreover, whereas the global automobile production slowed since the second half of 2021 due to shortages in automotive semiconductors, the Korean automobile industry reduced production disruptions by successfully managing the supply chain. After COVID-19, the Korean economy was able to recover quickly from the pandemic thanks to its stable social system and infrastructure. The Korean automotive industry, based on the well-established supply chain, also experienced less production decline during the crisis, and maintained solid demands based on the stable domestic market to quickly recover from the crisis and normalize operations compared to competitors.

"Korean Companies on the World’s Top 100 Auto Parts Makers List"

(Unit: USD million)

Korean Companies on the World’s Top 100 Auto Parts Makers List Year(2010,2015,2019) Name of company, Delivered amount
2015		2020		2021
Name of company	Delivered amount	Name of company	Delivered amount	Name of company	Delivered amount
Hyundai Mobis (6th)	26,262	Hyundai Mobis (7th)	25,074	Hyundai Mobis (6th)	29,073
Hyundai Wia(29th)	7,480	Hyundai Transys(34th)	7,742	Hyundai Transys(32th)	7,465
Mando(45th)	5,560	Hyundai Wia(38th)	5,827	Hyundai Wia(36th)	6,554
Hyundai Powertech(50th)	4,554	Hanon Systems(39th)	5,824	Hanon Systems(37th)	6,424
Hyundai Dymos(71th)	3,200	Mando(50th)	4,542	Mando(48th)	4,520
		SL(77th)	2,074	SK On(68th)	2,685
		Yura(78th)	1,954	SL(74th)	2,544
		Seoyon E-hwa(85th)	1,662	Yura(80th)	2,278
		Hyundai Kefico(89th)	1,582	Seoyon E-hwa(83th)	1,905
				Hyundai Kefico(87th)	1,736

※ Source : Automotive News (July 2022)

The sales of auto parts producers decreased as COVID-19 and semiconductor shortages slowed the production of finished cars, but some companies were able to improve their added-values and increase sales. Hyundai Mobis moved up one spot to sixth place on the Top 100 list as sales grew by 15.9% from 2020 to USD 29 billion, and Hyundai Transys and Hyundai Wia also moved up two spots with sales growing by 10.7% and 12.5%, respectively.

Hyundai Mobis - 15.9% Compared to 2020, Hyundai Transys - 10.7% Compared to 2020, Hyundai Wia - 12.5% Compared to 2020

Growing production of electric vehicles (EVs) also helped raise the rankings of Korean parts producers. Hanon Systems, which produces EV air conditioning systems, moved up two spots by increasing sales by 10.3 percent, while SK On, an EV battery supplier, made it to the top 100 list with sales reaching USD 26.8 billion. SL supplying LED lamps and ADAS components and Yura supplying electronic modules and wiring systems saw their sales increase significantly by 23.6 percent and 16.6 percent, respectively, compared to 2020.

Hanon Systems - 10.3% Compared to 2020, SL - 23.6% Compared to 2020, Yura - 16.6% Compared to 2020

Automobile Industry Leading the Korean Economy Open

Automobile Industry Leading the Korean Economy

The automobile industry, along with the semiconductor industry, leads Korea's manufacturing sector, accounting for more than 10% of the country's major indexes including production, employment, and exports. Although the number of businesses accounts for only 6% of the manufacturing industry, the automobile industry is greatly contributing to job creation by accounting for 11% of total employment in the manufacturing sector. The Korean automobile industry is constantly working to expand its overseas market to overcome the limitations coming from the small size of the domestic market, and the government is committed to supporting the industry.

"Status of Korea’s Automobile Industry"

Status of Korea’s Automobile Industry Number of Companies (units), Employment (1,000 persons), Production Amount (KRW billion), Added Value (KRW billion), Exports (USD million), Trade Balance (USD million)
Category	Number of Companies (units)	Employment (1,000 persons)	Production Amount (KRW billion)	Added Value (KRW billion)	Exports (USD million)	Trade Balance (USD million)
Finished cars	32	85,508	90,758	22,721	54,067	38,695
Ratio	0.0%	3.0%	6.1%	4.1%	7.9%	38,695
Auto parts	4,607	246,085	104,629	31,317	23,316	16,554
Ratio	6.6%	8.5%	7.0%	5.7%	3.4%	16,554

※ Source : Statistics Korea, KITA

※ Note

Number of companies, employment, production, and added value as of 2020; exports and trade balance as of 2022
The ratio is the ratio out of the manufacturing industry, but the ratio of exports is the ratio out of total export.

In 2021, Korea's auto parts industry recorded KRW 80.8 trillion in sales, up 10.7% from 2020, and surpassed the pre-COVID-19 level. OEM sales reached KRW 55.2 trillion and accounted for 68.3% of total sales, while OEM exports accounted for 26.9% with KRW 21.7 trillion and after-sales parts accounted for 4.8% with KRW 3.9 trillion. As the pandemic has somewhat subsided in 2021, automobile production has normalized and procurement costs have increased due to higher unit costs of parts, resulting in an increase of the sales of the Korean auto parts industry.

"Korea’s Auto Parts Industry: Sales Trends"

※ Source: Korea Auto Industries Coop. Association (KAICA)
Note: Based on primary parts makers

Korea's auto parts exports have been stagnant due to the global automobile production disruption caused by the shortage of automotive semiconductors and the economic downturn caused by the war in Ukraine. However, as demand has recovered from slump caused by COVID-19, export unit costs have increased due to vehicle upgrades and electrification, reaching USD 23.3 billion in 2022 and recovering to pre-COVID levels. Korean auto parts are mostly exported to the United States (USD 8.03 billion), Mexico (USD 1.82 billion), Slovakia (USD 1.38 billion), China (USD 1.38 billion), Vietnam (USD 1.16 billion), and India (USD 1.14 billion), which represent the world's largest auto producers and emerging producers. Exports of the auto parts industry account for 3.4% of Korea's total exports, the seventh highest after semiconductors, automobiles, petrochemicals, machinery, steel, and petroleum products. The industry recorded a trade surplus of USD 16.5 billion.

Korea mostly exports other automobile parts, transmissions, body parts, brake systems and accessories. Exports of transmissions, brake parts, and driving axle parts, which are considered as core parts, are increasing, while battery exports are also on the rise due to the growing demand for EVs.

"Korea’s Auto Parts Industry: Import and Export Trends"

※ Source : KITA

Strengthened environmental regulations and diversified vehicle models have increased the demand for electrified vehicles such as electric vehicles (EVs), plug-in-hybrid vehicles, and hydrogen fuel cell vehicles. The structure of the automotive industry is also shifting from internal combustion engine vehicles to electrified vehicles. Especially in the process of recovering from COVID-19, governments of major countries have introduced policies to support the future vehicle industry by providing subsidies for electrified vehicles and strengthening R&D and building infrastructure for future vehicles such as electrified vehicles and autonomous vehicles.

The Korean auto industry is also performing well by distributing electrified vehicles, rapidly increasing exports of electric and hydrogen vehicles, and preparing laws and systems for autonomous vehicles. In particular, Korean companies command a global market share of more than 30% in batteries, and Korea automakers have commercialized hydrogen fuel cell vehicles (FCEVs) for the first time in the world and topped global FCEV sales. In 2022, electrified vehicles including electric vehicles, hydrogen fuel cell vehicles, and hybrid vehicles accounted for 22.5% of production, 23.1% of exports, and 26.2% of domestic sales, and shares continue to increase.

"Korea’s EV Production and Sales Trends"

(Unit: units)

Korea’s EV Production and Sales Trends Category, Year
Category	2020			2021			2022
Category	Production	Domestic Demand	Exports	Production	Domestic Demand	Exports	Production	Domestic Demand	Exports
BEV	152,174	46,197	119,718	230,177	96,666	154,014	318,070	157,264	200,120
PHEV	30,523	13,235	26,065	52,600	19,701	37,957	47,310	13,114	46,173
FCEV	6,594	5,786	1,041	9,639	8,502	1,121	10,804	10,164	400
HEV	254,725	161,450	124,503	352,271	222,869	211,807	469,732	260,341	287,956
Total	444,016	226,668	271,327	644,687	347,738	404,899	845,916	440,883	534,649

※ Source : Korea Automobile Manufacturers Association, Korea Automobile Importers & Distributors Association

Government Strengthening Support to Maintain Competitiveness through Swift Conversion to Future Vehicles Open

Government Strengthening Support to Maintain Competitiveness through Swift Conversion to Future Vehicles

The Korean government's policies for future vehicles are not limited to autonomous vehicles and EVs, but are expanding the scale from existing manufacturing to services such as connected cars, autonomous driving, and car sharing. Based on the Future Vehicle Industry Development Strategy and the Autonomous Vehicle Policy Roadmap, the Korean government's policies to support future vehicles are focused on autonomous driving and EVs, and are gradually expanding to the areas of connected cars and car sharing. The government is focusing on boosting the penetration of EVs and resolving the lack of infrastructure, while for autonomous vehicles, it is concentrating in catching up with technologies, running autonomous driving testbeds, and supporting parts companies to accelerate the transition to future vehicles.

By 2030, the Korean government plans to transform 1,000 parts companies into future vehicle companies by: establishing a comprehensive support platform for preparing the parts industry for the future; supporting parts makers' business model innovation; and providing the means for business reorganization (e.g., technology, manpower, funds, and processes) compatible with company characteristics such as company size and contracting stage.

Having announced the Global Big 3 Auto Industry Strategy in 2022, the government is continuously pursuing policies related to the auto industry for a rapid and flexible transition to future vehicles and the expansion of boundaries of the auto industry to incorporate new mobility. To that end, the government devised policy tasks for joining the global top-tier in the field of electrification, flexibly transitioning the overall industrial ecosystem, building a stable supply chain, and creating new industries for autonomous driving and mobility. The government aims to increase annual EV production to 3.3 million units by 2030 and raise Korea's global market share to 12% by encouraging the auto industry to invest more than KRW 95 trillion over the next five years (2022-2026) and training 30,000 future vehicle professionals by 2030.

In addition, the Korean government is working towards enacting a special act on the transition to future vehicles to: foster and support small and medium-sized parts companies as they are essential for the auto industry supply chain; establish a basic plan for revitalizing the ecosystem of the future vehicle parts industry; train auto parts specialists; and establish a supply chain platform.
Production Facilities Expansion and Regional Specialization Strategies for Strengthening the Competitiveness of Future Cars Open
Production Facilities Expansion and Regional Specialization Strategies for Strengthening the Competitiveness of Future Cars

The Korean automotive industry is relatively evenly dispersed across the country and can be divided into three clusters of the West Coast cluster covering the Seoul metropolitan area, the Southeast cluster led by Ulsan, and the Honam cluster including Gwangju and Gunsan.

The Seoul metropolitan area is home to Kia Motors and GM Korea, as well as research centers and factories, including Hyundai Motor's Namyang Research Center and an experimental city (K-City) dedicated to testing autonomous vehicles. Chungcheong region has 106 primary suppliers concentrated in Cheonan, Asan, and Dangjin, while the Southeast region is home to major Korean automakers such as Hyundai Motor, Renault Korea, and GM Korea and 276 primary parts suppliers.

Moreover, the growing demand for EVs has led to the expansion of new production facilities needed for producing EVs. Hyundai Motor announced plans to build and operate EV production facility with an annual production capacity of 150,000 units in Ulsan in 2025. Kia Motors also broke ground on a new plant for producing 150,000 electric PBVs (Purpose Built Vehicles) per year in Hwaseong, which will be completed in 2025.

"Finished Vehicle Factories and Primary Parts Makers Across Korea"
Finished Vehicle Factories and Primary Parts Makers Across Korea
- Seoul:Parts companies 28
- Gangwon:Parts companies 4
- Incheon:Parts companies 53
  
  Incheon:GM Korea 440,000 units
- Gyeonggi:Parts companies 165
  
  Gwangmyeong:KIA 313,000 units
  
  Hwaseong:KIA 531,000 units, New EV facility planned (2025) 150,000 units
  
  Pyeongtaek:KG Motors: 165,000 units
- Chungnam:Parts companies 76
- Daejeon:Parts companies 8
  
  Asan:Hyundai: 300,000 units
  
  Seosan:Donghee Auto (KIA’s OEM) : 150,000 units
- Chungbuk:Parts companies 22
- Jeonbuk:Parts companies 67
  
  Gunsan:Tata Daewoo 8,000 units
  
  Jeonju:Hyundai: 103,000 units
- Gyeongbuk:Parts companies 67
- Daegu:Parts companies 44
- Jeonnam:Parts companies 7
- Gwangju:Parts companies 26
  
  Gwangju:KIA 477,000 units
  
  Gwangju:Gwangju Global Motors (Gwangju-type Jobs) : 70,000 units
- Ulsan:Parts companies 25
  
  Ulsan:Daewoo Bus: 6,000 units
  
  Ulsan:Hyundai: 1.4 million units New EV facility planned (2025) 150,000 units
- Busan:Parts companies 38
  
  Busan:Renault Korea: 300,000 units
- Gyeongnam:Parts companies 102
  
  Changwon: GM Korea: 210,000 units
※ Source : KAMA, KAICA
※ Note: 2021 finished vehicle production capacity, based on primary parts makers

In order to transition to future vehicles by developing a balanced industrial ecosystem, the government is working towards the reorganization of specialized businesses including autonomous driving and commercial vehicles by considering the foundation of each region's automobile and parts industries and the status of future vehicle infrastructure (i.e., autonomous driving, charging stations). Based on the conditions of the automotive industry and the infrastructure for testing and certification, the government plans to build a specialized support platform involving local governments, support organizations (Techno Parks, public research institutes, etc.), and universities to prevent duplicate investments and reorganize the future vehicles sector in a balanced manner.

Invest KOREA

Transport Machinery PM

Lee Sang Hun Key Industries Promotion Team

T.+82-2-3460-7514 E.sanghun@kotra.or.kr

Recommendation on Locations

BEST1

[Chungcheongnam-do Seosan City]

Myeongcheon Automobile Complex

Designated area(m2) : 142,673
Management : Chungcheongnam-do Seosan City
Nearby Railway : Hongseong Station (50km)
Nearby Airport : Gunsan Airport (124km)

BEST2

[Gwangju Metropolitan City Gwangsan-gu]

Pyeong-dong (Woljeon Small and Medium-sized Business Cooperation for Foreigners)

Designated area(m2) : 99,060
Management : Korea Industrial Complex Corporation
Nearby Railway : Gwangju Station (21km)
Nearby Airport : Gwangju Airport (7km)

BEST3

[Chungcheongnam-do Seosan City]

Seosan Auto Valley General Industrial Complex [formerly: Seosan

Designated area(m2) : 3,989,547
Management : Chungcheongnam-do Seosan City
Nearby Railway : Sapgyo Station (49km)
Nearby Airport : Cheongju International Airport (123km)

BEST4

[Ulsan Metropolitan City Buk-gu]

Dalcheon Agricultural Industrial Complex

Designated area(m2) : 259,634
Management : Ulsan Metropolitan City Buk-gu
Nearby Railway : Hogye Station (4km)
Nearby Airport : Ulsan Airport (8km)

BEST5

[Gangwon-do Wonju City]

Wonju Automobile Component General Industrial Complex

Designated area(m2) : 92,917
Management : Gangwon-do Wonju City
Nearby Railway : Donghwa Station (5km)
Nearby Airport : Wonju Airport (25km)

BEST6

[Jeollabuk-do Wanju County]

Wanju Techno Valley General Industrial Complex

Designated area(m2) : 1,311,399
Management : Jeollabuk-do Wanju County
Nearby Railway : Samrye Station (11km)
Nearby Airport : Gunsan Airport (62km)

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