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Automobile Output in Korea Likely to Drop below 4 Mil. Units This Year
Due to Labor Strikes
Automobile Output in Korea Likely to Drop below 4 Mil. Units This Year
  • By Michael Herh
  • December 19, 2019, 15:09
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Korea's automobile production is highly likely to fall below 4 million units this year.

Hyundai Motor Co., the flag bearer of the Korean automotive industry, has come close to 100 percent utilization of its Korean plants in four years. The company’s assembly plants have been running powerfully throughout the year thanks successful launches of new models and no labor dispute.

However, apart from Hyundai Motor and Kia Motors, three foreign carmakers operating in Korea suffered big slumps. They brought the slump on themselves by going on strike despite the worsening internal and external business environment.

From January to November of this year, Hyundai Motor produced 1,621,417 units at its Korean plants, up 2.3 percent from the same period of last year, the Korea Automobile Manufacturers Association (KAMA) said on Dec. 18.

If the current trend holds, Hyundai's domestic plant utilization rate is projected to reach 100 percent this year. As of last year, Hyundai Motor’s annual production capacity stood at 1.764,000 units. This year, its average monthly production is around 150,000 units. Accordingly, the automaker is highly likely to hit the production target of 1.77 million units set up earlier this year. If Hyundai's domestic plant utilization rate exceeds 100 percent, it will be the first time in four years since 104.4 percent in 2015.

The top contributors to elevating the utilization rate include new models and a compromise between the labor and management. Hyundai's first compact SUV Kona will surely become the most exported Korean car this year. In addition, the large SUV Palisade, which was released last year, is also gaining popularity in the Korean and overseas markets.

Until last year, the Hyundai Motor labor union had staged strikes every year, but this year, it wrapped up its wage and collective bargaining agreement peacefully for the first time in eight years since 2011. This also contributed to raising the utilization rate.

But Korea's automobile production is highly likely to fall below 4 million units this year. As of November this year, the number of cars produced by the Korean car industry reached 3,613.077, a 1.6 percent drop from the same period of last year. Industry watchers believe that Korea’s automobile output will fall below 4 million units this year, given that the nation’s average monthly auto production is 330,000 units this year.

Even though Hyundai Motor, the No. 1 Korean carmaker, did a good job, all of the rest performed poorly. Kia Motors put up a relatively good fight as its annual output edged down by 0.2 percent to 1,336,233 units. But the three foreign automakers -- GM Korea (-8.2 percent), SsangYong Motor (-6.2 percent), and Renault Samsung Motors (-24.2 percent) –- contributed to the decline in production.