google-site-verification=-dZePfgWB2ZtA3dxPB_nPrOD55Shnmh0iXAEngMSTwE dZePfgWB2ZtA3dxPB_nPrOD55Shnmh0iXAEngMSTwE
American Car

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

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

Gangnam Murderer Sent to State Prosecutors

Police have sent the suspect of the recent stabbing death of a 23-year-old woman to state prosecutors.

busan metro

Busan May Add Six New Subway Lines by 2026

Six new subway lines are expected to open in Busan over the next decade.


What You Need to Know About the 2016 Busan International Motor Show

The 2016 Busan International Motor Show is just days away after a two year hiatus in the city.

busan cinema center busan

5th Arab Film Festival Runs From May 26

The 5th Arab Film Festival gets underway at the Busan Cinema Center from May 26th through June 1st.


Monthly Ha Ha Hole Returns Tonight

Busan’s first, best, and only open mic comedy night returns tonight for its May edition at HQ Bar in KSU.

Image: Rock Festival Busan/Facebook

Busan International Rock Festival Announces First Lineup

The 17th Busan International Rock Festival has announced its first of three lineups for their annual summer event.

water safety

More Lifeguards to Man Busan’s Beaches This Summer

The Busan Fire Department will operate a 119 water rescue team for the safety of visitors as local beaches will open starting next month.

oryukdo trail busan

Outdoors: Crisscross the Island Cliffs of Oryukdo

For an unreal ocean view, consider the expansive Haeparang Trail — a 770-kilometer-long trekking course along the eastern coastline of Korea.

busan station

City Looks to Ban Smoking at Busan Station

The surrounding area of the Busan train station might soon be a non-smoking area.

Image: Moscow Symphony Orchestra

Moscow Symphony Orchestra to Open Busan Port Festival

The Moscow Symphony Orchestra will be on the opening stage of the Busan Port Festival on Friday.

The Busan Shakespeare in the Park

Shakespeare in the Park Returns to Busan

Busan English Theater Association’s “The Taming of the Shrew” will be performed May 29, June 4 and 5 in Dongnae and on Dalmaji Hill.

Image: Facebook

Shakespeare in the Park Performance Schedule Changes

Due to scheduling problems at Dalmaji’s Amphitheater this weekend, the scheduled performances of Shakespeare in the Park have undergone some changes.

haeundae beach

2016 Opening Dates for All Seven Public Beaches in Busan

Busan City has announced the dates of operation for the seven public beaches during the summer in Busan.

busan gimhae airport

Foreign Visitors to Busan Jumps Almost 30% Year-on-Year

The number of foreign tourists who visited Busan in the first quarter has increased by almost 30 percent compared to last year.


Haeundae Sand Festival Gets Underway May 27th

The 2016 Haeundae Sand Festival will be held for four days starting on May 27th, at Haeundae Beach.


Bicycle Accidents Continue to Increase

The number of bicycle-related accidents in the city is increasing, possibly due to the shared sidewalks between bicycles and pedestrians.


Ironman 70.3 Busan to Allow Team Participation

The 2016 IRONMAN 70.3 Busan will allow team participation this year according the event’s public relations agency.


Should You Get a Personal Trainer?

To get a personal trainer or not to get a personal trainer? Isn’t this what Shakespeare pondered? Well, something like that as Randy Behr reports





About Bobby McGill


Check Also

t-50 Korea

Thailand Buys T-50 Trainers from Korea

Korea Aerospace Industries has signed a $110 million deal with the government of Thailand to export trainer jets for use by the Thai military.

Leave a Reply