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
Screen Shot 2015-04-16 at 9.38.33 PM

Korea Mourns One Year Anniversary of Sewol Tragedy

President Park Geun-hye today offered deep condolences to the family members of those killed in last year’s deadly ferry disaster. It comes as South Korea marks the first anniversary of the tragedy with somber ceremonies across the country. Park gave a national address at the southwestern port of Paengmok at Jin Island, near the shipwreck […]

0 comments
Screen Shot 2015-04-15 at 10.01.41 PM

Gov’t Holds Aviation Safety Meeting

The South Korean government said today it plans to hold a safety inspection meeting with officials from eight local airlines, one day after an Asiana airplane veered off the runway while landing at Japan’s Hiroshima airport, injuring 18 passengers. The accident quickly renewed airline safety concerns, which first attracted special attention in July 2013 after […]

0 comments
Screen Shot 2015-04-15 at 1.10.10 PM

Bulmosan Tunnel Rates to Rise

The minimum toll rates for the Bulmosan (불모산) Tunnel, the second phase of the Busan-Changwon private investment project, will be increased from the existing 900 won to 1,100 won. An official of Gyeonnam said that the fees will be adjusted to 1,100 won for compact vehicles, 1,700 won for mid-sized vehicles, and 2,300 won for […]

0 comments
park

Haps Weekend Picks April 17,18,19

A great weekend of activities is planned around the city to enjoy.

1 comment
1107

BIFF, Venice Film Fest to Collaborate on Asian Film

The Busan International Film Festival (BIFF) and the Venice International Film Festival will work together to support Asian independent films. The Asian Cinema Fund of BIFF announced that it has concluded an agreement to support one Asian film to be selected among three projects by ‘Biennale College Cinema’, a budget cinema support program run by […]

0 comments
Opening_ceremony

BISFF Tickets Go On Sale

The Busan International Short Film Festival has announced that it started its ticket reservation service for the opening film and other screening films from today. This year’s film festival will be held at the Busan Cinema Center from the 24th to the 28th. Tickets can be reserved online through the center’s website. The ticket price […]

0 comments
Screen Shot 2015-04-15 at 8.06.17 AM

Kakao Story Most Popular SNS in Korea

KakaoStory, a photo-sharing service operated by Daum Kakao Corp., was the most popular social networking service (SNS) in South Korea last year, a poll showed today. The service outpaced Facebook and other global platforms. According to the survey conducted by Hankook Research on 9,381 people aged between 13 and 69, 51.8% picked KakaoStory as their […]

0 comments
Screen Shot 2015-04-08 at 8.39.31 PM

Only 3 in 10 Have Healthy Lifestyles in Busan

A new report shows that only three out of ten Busan residents have healthy lifestyles. According to the Ministry of Health and Welfare’s 2014 survey on the health of local communities, only 30.5% of the respondents in Busan were non-smokers, walked more than thirty minutes a day for more than five days a week, and […]

0 comments
FullSizeRender

Smoking at Record Low, Drinking at All-Time High Among Koreans

Drinking among South Korean adults hit an all-time high last year, while the smoking rate edged down to a record low, a poll showed yesterday. The drinking rate for adults — those who drink once or more per month — rose to a record high of 60.8 percent last year, up from 59.5 percent tallied […]

0 comments
Screen Shot 2015-04-15 at 8.11.55 AM

BIPAF Set to Begin Ten Day Run on May 1st

The 12th Busan International Performing Arts Festival (BIPAF) will kick off on May 1st under the concept of “Welcome, Shakespeare.” This year’s festival will take place until May 10th at various venues including the Busan Cultural Center, the Busan Citizen’s Hall, the Busan Art Center, the Bada Gallery at the Suyeong Culture Center, the outdoor […]

0 comments
Screen Shot 2015-04-13 at 1.25.48 PM

2015 Hallyu Cultural Class Monthly Schedule

The Busan Foundation for International Activities (BFIA) will hold its monthly Hallyu Cultural Class 2015 for foreigners residing in Busan. The date of the classes will be announced every month. For those who would like to attend the Hallyu Cultural Class, please register by calling the BFIA at 051-668-7909, emailing zho2005@naver.com (contact person: Jang Hae-gu) […]

0 comments
20150409130832_1

Space Lee Ufan to Open as Annex of Busan Museum of Art on April 10

The Busan Museum of Art announced that it will open ‘Space Lee Ufan’ as an annex to the Busan Museum of Art on April 10, 2015. It will be housed in a two story building with one level underground and occupy a total area of 1,400 square meters. About 20 of Lee’s works, from his […]

0 comments
3-3

Dadaepo Sunset Fountain of Dreams Begins Operations Saturday

An official of Saha-gu, Busan said that the Dadaepo Sunset Fountain of Dreams will officially open on April 18th with an opening ceremony at 6 p.m. that day. The fountain is scheduled to operate until November 1. From Tuesday to Sunday every week during the operational period, visitors can enjoy playing in the fountain and […]

0 comments
Jinhae_Gunhang_Festival_20080405

Weather Hampers Jinhae Cherry Blossom Fest Attendance

Recent data shows that a total of 2.52 million people visited the 53rd Jinhae Gunhang Naval Port Festival that was held from April 1 to 10. The number represents a 500,000 decrease from normal years. The festival’s organizing committee revealed that approximately three million people visit the festival each year, but this year’s figures were […]

10n comments
seonyo_do_korea (1)

Travel in Korea: Seonyu-do

Sometimes we all need a little time away. The balli-balli life that many of us, foreign or Korean, live in Busan can drive one crazy. The islands hugging the Korean coastline have been a refuge for anyone looking to escape the city, relax and find a little (comparative) peace and quiet. While most of us have been to Geoje or Jeju, there are dozens of smaller, less popular islands within reach of Busan. Among the best of the bunch is Seonyu-do.

5n comments
Screen Shot 2015-04-16 at 9.52.51 PM

Jeonbuk Make History With Victory of Busan IPark

Down but not out, Jeonbuk Hyundai Motors got a piece of South Korean professional soccer history Wednesday night, thanks to a 2-1, come-from-behind away victory over Busan IPark. After rallying from a second-half deficit in the K League Classic showdown, Jeonbuk has not lost in 21 matches. They tie the record for the longest unbeaten […]

0 comments
Screen Shot 2015-02-12 at 8.59.01 AM

Korea Gets Easy Draw For 2nd Round of Asian WC Qualifiers

Korea will take on Burma, Kuwait, Laos and Lebanon in the second round of Asian qualifiers, for the 2018 FIFA World Cup in Russia. The results of Tuesday’s draw in Kuala Lumpur appear largely favorable for Korea, which has avoided such potentially troublesome opponents as Oman, Saudi Arabia and Qatar. Uli Stielike, manager of the […]

0 comments
IMG_0145

Former Player Cho Dong-hyun Named KT Sonic Boom Coach

Busan’s KT Sonicboom, the local member of the Korean Basketball League, have appointed former Ulsan Mobis coach Cho Dong-hyeon as the new head coach. Cho was a Busan KT franchise star from 2004 to 2013, showing strong leadership as a team captain. He expressed his desire to reform Sonic Boom into a team with strong […]

0 comments

 

Founder/Editor-in-Chief

Leave a Reply

Your email address will not be published. Required fields are marked *

18 − 10 =

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>