The Korean Car Industry’s First Time Battle on its Home Turf

By  |  0 Comments

This past week GM Korea announced that sales of its Chevrolet brand automobiles have risen 27 percent year-over-year in the past six months. As FTA’s are being inked with auto producing nations, Chevy’s sudden rise in sales signals the dawn of a new era for the automobile industry here. It will be interesting to watch how Korean car makers, cozy in their long protected market, react to competition on home turf.

Looking back on the country’s fifty-six years making cars raises an interesting question: Would the industry have seen a more rapid rise to its high rank on the global market if the heavily-guarded domestic market was open to foreign competition earlier? By extension, would Korean consumers in the eighties and nineties been availed to a higher quality product sooner?

The first Korean car came off the assembly line here in 1955. Not that it was much of a line –or much of a car. Yet, the “Shibal Taxi”, as it was known, put together entirely from odds and ends, including sheet metal from oil drums and leftover U.S. Army parts, hit the road in all the glory it could muster.



The “Shibal Taxi” (????). Be careful saying ‘shibal’, it is also Korean profanity.


From that humble beginning the infant car industry meandered along at a snails-pace until 1962, when the Park Chung Hee administration set forth economic plans to transform Korea into the auto manufacturing giant it would later become.

At the onset, Korean auto-makers suffered from a dearth of advanced technology and a dismal level of productivity. This forced the industry to rely exclusively on imported components and know-how from the United States, Japan and Europe.

The Park administration was wise to capitalize on the desire of the world’s leading car companies to do business here in a newly-opened consumer market. The approach to establishing the new industry is where questions of how much faster it could have risen, by producing a better product, gets murky.

The administration first enacted strict import bans that allowed no foreign cars to be sold in Korea unless they were shipped here completely disassembled and then assembled in Korean factories. Additionally, no foreign automotive company was permitted to do market here unless partnered with the local players in Korea’s newly minted auto industry.

There was both wisdom and folly in the restrictions on foreign imports. The positive aspect was that by requiring all import cars be assembled here, the government had essentially established a national automotive hagwon; with international automotive technology delivered right to the door. This allowed the Korean industry to learn the ins and outs of assembling automobiles from the ground up.



The Chevy Malibu is making its way to Korean shores.


This was fine at first, though would later prove problematic due to an unestablished position on the world market, forcing Korean car makers to sell exclusively to the domestic market. With no competition from outside brands due to heavy restrictions, there was little incentive to make better cars here. Until the late 90’s this was of great detriment to Korean consumers, left with the choice of either buying a lower quality domestic product or paying tariffs as high as 60% on superior foreign makes.

Despite low quality, with a captive domestic market, the industry continued to grow as increasing numbers of Korean consumers wanted to get behind the wheel. It wasn’t until the late 1980’s that Korea finally surpassed North American safety regulations and were able to penetrate the immense American market. This was the first time that the industry was faced with competition on the global stage, forcing it to adjust accordingly.

It was much the same in the United States when Japan first started importing heavily into America. Suddenly, U.S. automakers found themselves competing with a superior Japanese product.

In the 1970’s the American auto industry had gone from making some of the best cars in the world, to some of the worst. The once relatively uncompetitive American market now hosted the presence of superior Japanese brands. There was no other choice but to make better cars.



The 1986 Hyundai Excel, Korea’s first foray into the North American market. Though rated low for quality, the $4,995 price tag garnered it a lot of sales in the U.S.


Likewise, despite initial quality concerns upon entering the North American market, the quality slowly rose as Korean manufacturers were forced to compete for market share for the very first time. This fight spurred moves by Hyundai to face its detractors head-on. In 1998 they invested heavily in manufacturing quality, design, and long-term research and development. So confident was the company in the quality of their new models, they offered a 10-year/100,000 mile warranty on all vehicles sold in the United States.

The plan worked. By 2004 Hyundai tied with Honda for brand quality, second in the industry behind Toyota, according to J.D. Power and Associates.

Yet, the question remains: would Korea have built better cars sooner had they faced competition here in the Korean market?  On one side there are those that say protectionism and government intervention assured that the fledgling industry was allowed to grow unhindered. The flip side is there are those who believe that competition with foreign makes would have forced Korean automakers to innovate faster to compete, thus creating a better product much earlier than they did.

No matter your position, today’s results are undeniable and the rest, as they say, is history.  As of this year, Hyundai/Kia became the fourth largest automaker in the world selling a combined 3.19 million vehicles worldwide over a six month period–180,000 more than Toyota. This is a testament to market proven quality of the product, as sales continue to rise world wide.

And much the same, the future of the industry is as good a topic for speculation as the past. With the growing popularity of foreign brands in an increasingly open market, will companies such as Hyundai/Kia, which currently holds over 70% domestic market share, rise to the occasion in their first bouts with foreign competition here at home?


Check out an interesting photo essay of cars in Korea over the years.

You can read the original publication of this article in Korean in the Joong Ang Ilbo here. (PDF)



A 1986 ad for the Excel. The headline was true, though the subtext is questionable. It clocked zero to sixty in just under 16 seconds.


The Latest Haps

Latest NewsEntertainmentLifestyleArts & CultureTravelSports
20150330132601_1

Busan Center for a Creative Economy & Innovation Opened

Busan Metropolitan City, Lotte Group and the Ministry of Science, ICT and Future Planning held an opening ceremony for the Busan Center for a Creative Economy & Innovation at BEXCO on March 16, 2015. President Park Geun-hye, Busan Mayor Suh Byung-soo, Minister of Science, ICT and Future Planning Choi Yang-hee, and the CEO of Lotte […]

0 comments
writing-group

Busan Writing Group Now Meeting Sundays in Seomyeon

If you are an aspiring writer in the Busan area who would appreciate input from others like yourself, but cannot make the Wednesday night meetings in Oncheonjang, then here is some good news.  Starting March 29th, BWG will meet every other Sunday at the Angel-in-us cafe near Seomyeon yeok’s exit 7 at 3 pm.  The […]

0 comments
Samsung-Spying

27 Samsung C & T Employees in Bizarre Surveillance of Elderly Stockholder

Last week, Samsung C&T, the founding company of the present day Samsung conglomerate empire, posted an official apology on their blog from company president Choi Chi-hun. The statement from Choi read: “Our employees kept watch on a civil petitioner’s movement, which was very wrong to do, in preparation for the stockholders’ general meeting. It is something that cannot […]

0 comments
park

Haps Weekend Picks March 27,28,29

The last week of March is here bringing with it the some nice spring weather and the blooming of the cherry blossoms, sure to make areas of the city congested with traffic all weekend.

1 comment
20150325142004_1

BeFM Expands Frequency Band, Revamps its Programs

With spring coming up, the Busan English Broadcasting (Busan e-FM) radio station will greet listeners with an overhaul. The revamp will include the enlargement of its frequency band, the expansion of Chinese shows and the overall modification of programs. By adding the new frequency band FM 103.3MHz to the existing FM 90.5MHz, the local radio […]

0 comments
BIFS International Day

Celebrate Diversity on International Day at BIFS

Busan International Foreign School is holding International Day 2015 in Gijang campus on Saturday, April 11th from 10 AM  – 2 PM. This will be a day filled with food, activities, and fun for all ages, as the school invites everyone in the community to celebrate diversity together!

0 comments
Jagged Ridge Trail Korea

Some Great Outdoors – Hiking Korea’s Jagged Ridge Trail

Hiking. It happens in Korea. A lot. One hike in particular is well-known in the Korean hiking community, but little known in the foreign community –the Jagged Ridge Trail.

0 comments
azaleas

Azaleas Late to Bloom This Year in Busan

The Busan Regional Meteorological Administration announced that azaleas have begun blooming in Busan. This year’s bloom comes 17 days later than last year and four days later than average. For Busan, azaleas began sprouting on March 10, and took 13 days to reach their full bloom. The administration also stated that the reason for the […]

0 comments
Screen Shot 2015-03-24 at 7.53.42 AM

Credit Card Firms to Remove Active X Framework Soon

Major South Korean credit card firms will remove the Active X framework starting later this week in a bid to enhance convenient and faster e-commerce payments, industry sources said yesterday. The system has been the main cause for complaints from online shoppers. Shinhan Card Co., the largest card issuer by market share; Hyundai Card Co., […]

0 comments
writing-group

Busan Writing Group Now Meeting Sundays in Seomyeon

If you are an aspiring writer in the Busan area who would appreciate input from others like yourself, but cannot make the Wednesday night meetings in Oncheonjang, then here is some good news.  Starting March 29th, BWG will meet every other Sunday at the Angel-in-us cafe near Seomyeon yeok’s exit 7 at 3 pm.  The […]

0 comments
4-5-1 (2)

Regular Traditional Folk Performances to Be Held at Suyeong Historical Park

Starting in January 2014, the last Wednesday of every month has been designated as a special “Culture Day” in Korea to help foster more involvement in arts and culture.  As a Culture Day event, traditional folk performances in Suyeong will be held every last Wednesday of the month from March to November at 3 p.m. […]

0 comments
gugak center

Busan National Gugak Center to Hold Monthly Open House

On every Culture Day of the month (last Wednesday of the month), the Busan National Gugak Center will hold an Open House which will allow the public to tour the Busan National Gugak Center, to experience gugak (Korean traditional music) and traditional costumes, as well as watch art group rehearsals. It aims to help people […]

0 comments
FullSizeRender (6)

Five Cherry Blossom Festivals in Busan Worth Checking Out

The beauty of spring is celebrated each year at delightful spring flower festivals across the city. Several highlights, each featuring an array of spring blossoms and events, are listed below. Upcoming Cherry Blossom Festivals in Busan Kkonmaeul-ro Cherry Blossom Festival – Kkonmaeul (Flower Village) in Seo-gu, April 3-4 Gangseo Nakdong Riverside Cherry Blossom Festival – […]

0 comments
Jagged Ridge Trail Korea

Some Great Outdoors – Hiking Korea’s Jagged Ridge Trail

Hiking. It happens in Korea. A lot. One hike in particular is well-known in the Korean hiking community, but little known in the foreign community –the Jagged Ridge Trail.

0 comments
Screen Shot 2015-03-26 at 1.18.36 PM

Northeast Asian Tourists on the Rise in Busan

A new study shows that the number of tourists from Japan, China and Taiwan, who entered the country through Gimhae airport last year recorded 514,659 people. Among them, about 194,000 people have used AirBusan, a low-cost airline headquartered in Busan, which shows that one out of three foreign tourists have used AirBusan last year. Particularly, […]

0 comments
Screen Shot 2015-03-24 at 3.23.22 PM

Park Tae-hwan Suspended 18 Months for Doping

South Korean Olympic swimming champion Park Tae-hwan has been suspended for 18 months for an anti-doping violation, officials in Switzerland announced yesterday (local time). The ruling came merely hours after FINA, the international swimming governing body, held a doping hearing with Park in attendance in Lausanne, Switzerland. Park, a four-time Olympic medalist and two-time world […]

0 comments
61671_478642561110_2476120_n

KBO Says Leave the Booze at Home

As part of the Korean Baseball Organization’s “B Safe Campaign”, fans will no longer be able to bring in outside alcohol into the leagues stadiums beginning this year. “People will not be allowed to bring alcohol drinks in cans or glass bottles into the stadium from the outside. Paper cups or bottles less than one […]

0 comments
Screen Shot 2015-03-19 at 2.18.26 PM

Choi Dong-won’s Mom to Throw Opening Day’s First Pitch

The mother of the late former Lotte Giants player Choi Dong-won, has been chosen to throw out the first pitch at the Giants’ opening home game against KT on March 28th. A representative for the Giants said it had come to the decision because of Choi’s popularity among fans due to his being from Busan. […]

0 comments

 

Founder/Editor-in-Chief

You must be logged in to post a comment Login

Leave a Reply