Korean Customers Shun Cars from 3 Foreign-invested Automakers

Eight out of 10 cars produced in Korea this year are those of Hyundai Motor and Kia Motors. It is the first time since 2002 that Hyundai and Kia jointly accounted for more than 80 percent of the vehicles produced by the five major automakers.

By contrast, GM Korea, Renault Samsung Motors, and SsangYong Motor are suffering from a production cliff. Auto industry experts are concerned that the three foreign automakers may face a big crisis if they fail to make breakthroughs in productivity, labor relations, and high-tech cars for the future.

From January to September this year, the five automobile producers rolled out a total of 2.910,977 cars, up 0.5 percent from the same period of last year, said the Korea Automobile Manufacturers Association (KAMA) on Oct. 13.

Hyundai and Kia led the growth in automobile production. Hyundai Motor produced 1,294,691 units, an increase of 4.3 percent from a year before, while Kia Motors churned out 1,086,075 units, an increase of 2.9 percent. Hyundai Motor accounted for 44.49 percent and Kia 37.32 percent of the total car production. The two held a combined 81.81 percent share. If this current trend holds, Hyundai and Kia are expected to account for more than 80 percent of the total car production in Korea for the first time in 17 years since 2002.

On the other hand, production by GM Korea, Renault Samsung, and Ssangyong sank from a year before. "A lack of new models from the three and rumors about their withdrawal from Korea are making consumers turn away from the models from the three," said Lee Hang-ku, a senior research fellow at the Korea Institute for Industrial Economics and Trade.

Production by Renault Samsung dropped 24.9 percent on year to 12.3920 units, the biggest decrease among the three. It was followed by GM Korea (-7.7 percent) and SsangYong Motor (-0.4 percent).

The proportion of the three foreign-invested carmakers has been on a steady decline. Experts say that these three companies will not be able to avoid difficulties if they do not solve problems such as disputes with labor unions, low productivity and a lack of competitiveness in future ca technology.