Summer Labor Struggle Is a Variable
South Korea lost the sixth spot in the world’s car production rankings to Mexico in 2018, but is close to recapturing it. Up until the first quarter of this year, the gap between the two countries was estimated at 72,000 units, which seemed too wide for Korea to close, but the popularity of newly launched SUV models have helped Korea catch up. Whether Korea overtakes Mexico or not seems to depend on summer labor struggles.
Automobile production in Korea from January to May of this year stood at 1,695,485 units, up 1.61 percent from the same period last year, the Korea Automobile Manufacturers Association (KAMA) said on Aug. 4. The figure was the seventh highest after China (10,233,272 units), the United States (4,798,458), Japan (3,369,521 units), Germany (2,263,424), India (2,127,364) and Mexico (1,713,956)
Only until 2015, Korea had been the world's fifth-largest automaker. At the time, Mexico's annual production of cars (2.37 million units) accounted for only 56 percent of Korea’s 4.23 million units. Then India overtook Korea. Last year, Korea lost the sixth spot to Mexico.
Last year, the annual production gap between Korea and Mexico reached 69,000 units. In the first quarter of this year, it expanded to more than 72,000. But Korea managed to narrow it to 18,471 units by May.
However, a big variable is the labor unions of Hyundai Motor and Kia Motors. Both labor unions already voted for a strike before the summer vacation. Two partial strikes by Hyundai Motor in 2018 cut car production by 11,487 units. This means that the gap between Korea and Mexico, which has been narrowed a great deal, can more than double again.