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

By  |  1 Comment

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

Heavy Rain, Strong Winds Expected Until Tomorrow

A low pressure system coming from the central area will affect the southern region, as heavy rainfall this morning in Busan saw 17 millimeters by 7 a.m.  The Busan Weather Agency has also forecasted an additional 40 to 100 more millimeters, or up to four inches of rain until tomorrow. The weather agency also forecasts strong winds tomorrow […]


Interview: Busan Jin-gu Police Chief Lee Soon-young

Safety is one of the biggest concerns when one visits overseas, but Lee Soon-young, Chief of Police of Busan-jin Police Station in Seomyeon, assures tourists and residents alike that safety is the key priority for officers around the nation. Lee, who took over the reigns of the largest precinct in the city in early July […]

Gilded Age

Welcome Back to the Gilded Age and Other Dangers to American Democracy

A recent television documentary on the History channel provided much interesting information..

1 comment

Kristjan Järvi Absolute Ensemble to Perform With Sarah Chang

Estonian-American conductor Kristjan Järvi leads the exciting new project, Absolute Korea, featuring violinist Sarah Chang with a performance next Sunday, October 26th, at the Busan Cinema Center Outdoor Theater. Show time begins at 7 p.m. According to the group, they take familiar traditional and modern Korean songs and add a pinch of modern flavor. The Korean-inspired […]

The Move Film

Review: Marat Sarulu’s ‘The Move’

Marat Surulu’s The Move, a rare film festival entry for the nation of Kyrgyzstan, is a laborious, meditative, and plodding film. Though the sedating tendencies of its pace stymie the easy enjoyment of the nearly three hour epic, The Move will crawl into one’s senses as Surulu hypnotizes the viewer with beautiful cinematography. The mise-en-scene of the […]

(C) 2003 Gateway,Inc.

Haps Weekend Picks October 17,18,19

October continues its tradition of being one of the best months in the city for events as another weekend of great activities is planned around the city.

2n comments

Guide to the ITU Plenipotentiary Conference

The ITU (International Telecommunication Union) Plenipotentiary Conference, dubbed the “IT Olympics,” is set to kick off in Busan. It is slated to open today at BEXCO in Centum City for three weeks from Oct. 20-Nov. 7. The conference is one of three recent mega-scale global events along with Russia’s Sochi Winter Olympics last February and Brazil’s […]

coffee in Korea

Coffee Makers in Korea: Choose Your Brew

A homebrewed cup can wake you up without the guilt of a 5,000-won latte

clothing swap busan

Fast Fashion and the Clothing Swap

Locally based English teachers Kara Bemis and Brittney Gail Desch have organised  a seasonal clothing swap, and they hope it is the first of many. The event is to be held at Table Talk English Cafe in KSU on Sunday, October 19th from 2pm-5pm. In a recent interview Kara explains the event is meant to […]


10th Busan Fireworks Festival Schedule

The Busan Fireworks Festival celebrates its 10th anniversary this year with another big line-up of events, promising to be the biggest yet. You can check out the best places to catch the fireworks if you’re looking to avoid the crowds and get the best views of the pyrotechnic spectacle. The 10th Busan Fireworks Festival (Oct. […]


Peace Poetry Comes to Busan

This Sunday at 4pm, in a sunny, chic, little-known cafe upstairs near PNU, a unique poetry event is taking place. The idea came from Barbara Walden, Assistant Professor and writing teacher at the Busan University of Foreign Studies. When asked about the event and the theme of peace, Barbara replies: “Why is this strange thing […]

Minh Nguyen-Vo

Sci-Fi, Reality, and Vietnam: A Conversation with the Director of Water/2030

Award-winning script writer and director, Professor Minh Nguyen-Vo.

1 comment

Day Tripping: Wonderful Oedo

One of the most secretive islands in Korea’s past, Oedo (pronounced WAY-do), is a little bit of paradise less than two hours from Busan and offers nature at its best for anyone looking for a respite from the city. The small, 14.5-hectare island, just a 20-minute boat ride south of Goeje Island, gives the impression […]


The Charms of Changnyeong County, Part I

The county’s main claims to historical fame are that a minor victory over the Japanese was scored there in 1592

Suwon Festival

Photos: Suwon Hwaseong Cultural Festival

Fall in South Korea brings with it the perfect outdoors temperature to make the most of being outdoors. One of the best ways to enjoy a day in the sun is to experience a few of the abundant festivals taking place all over the peninsula. Suwon Hwaseong Cultural Festival runs over five days from Wednesday […]


IPark Dominate Gyeongnam 4-0

The Busan IPark used their best offensive output of the season to easily defeat Gyeongnam 4-0 at the Asiad World Cup Stadium Sunday afternoon. With the victory, their second in a row and seventh of the seasson, the IPark moved into ninth place, one point ahead of Seongnam. The IPark are now undefeated in five […]


Samsung Clinches Fourth Straight Reg. Season Title

The Samsung Lions clinched their fourth consecutive pennant in the top South Korean baseball league with a narrow victory on Wednesday.

Screen Shot 2014-10-16 at 10.49.17 AM

KT Defeats LG 84-79, Improves to 2-1

Five KT players scored in double digits as the new look KT Sonic Boom improved to 2-1 on the season with an 84-79 victory over last year’s league finalists LG Sakers in Changwon. Marcus Lewis and Yoon Yeo-gwan led the KT attack with 14 points each, with Lewis adding 11 rebounds. KT outscored LG 24-15 […]




1 Comment

  1. Pingback: URL

Leave a Reply

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

10 − ten =

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>