MOCIE Auto Team's
Kim Discusses Gov't-Car
Industry Cooperation

Korean automakers post record year despite high oil, raw materials prices

A discussion of the Korean economy is incomplete without mentioning the stupendous development of the nation's automobile industry, as it is a major factor in Korea's economic take-off, Chief Kim Chang-kyu of the Automobile and Shipbuilding Team of the Ministry of Commerce, Industry and Energy (MOCIE) said recently.
Korea was a barren land as far as automobile production was concerned half a century ago. But, 50 years later, the country's auto industry has made a quantum leap and is now the fifth-largest auto producing nation in the world, a feat that can't be found anywhere else and is an envy of other countries.
Kim said the auto industry did well last year, despite difficulties it faced including high oil prices and the turbulent won-dollar exchange rate. The industry posted a record $50 billion in exports last year, a monumental achievement in its relatively short history.
The amicable relationship between labor and management in the industry recently played a big part in turning out a record 4 million vehicles last year, unhindered by chronic labor disputes ending in walkouts. The expansion of overseas auto production and the marketing network for Korean automakers also contributed a lot to boosting car output with 1 million cars produced at overseas Korean auto plants.
Along with improved sales of Korean cars, their upgraded quality, as confirmed by auto quality evaluation organization J.D. Power, helped increase awareness and, thus, sales of Korean cars around the world.
But, he said, the environment for autos around the world is likely to grow worse down the road and in order for the Korean auto industry to maintain its competitive edge, each automaker should take immediate action in concert with government support.
This year, too, will see an excess of production of cars around the world, resulting in intensifying competition among automakers, especially in the "BRIC` nations, which are likely to be the dominant car markets.
Furthermore, Kim said, many countries including Korea will implement strict environmental control regulations to reduce the emission of exhaust from vehicles in a bid to prepare for the post-Kyoto protocol.
The United States is likely to strengthen its environmental regulations by some 40 percent compared to where they stand now. The EU is likely to follow suit by coming up with tougher regulations against greenhouse gases, despite objections from the business community.
High oil prices, the appreciation of the won versus the dollar and rises in the prices of raw materials will continue to hinder business activities.
The government will focus on the industry's ability to maintain its competitive edge in the international market by solidifying its bases.
The government will first draw up a road map, both long and mid-term, in the face of climate change, global environmental problems and tougher competition. The government will see to it that the auto industry will be able to take advantage of the new environmental regulations in order to continue its climb up the ladder of development, as it is inevitable that the industry will have to abide by the stricter regulations to cut greenhouse gases.
The government will encourage automakers to develop clean diesel cars, including environmentally-friendly hybrid cars, and take measures to create the demand for such cars.
The government will also provide support to auto parts makers to help the automakers maintain their competitive edge. The government will focus on auto-related IT and electronics parts, which have a competitive edge in the world, and assist in the localization of various key auto parts.
The government will also seek ways to resolve trade issues through a joint effort between government and civilian sectors. In a nutshell, the government will try to maximize the benefits for the auto industry in various moves to set up new discipline in international trade and in free trade agreements with foreign countries, including ones already concluded and others currently in negotiations such as those with the EU, Canada, China and Japan.
When these government intentions and automakers'efforts to boost their competitive edge are combined, the new year will be a good one for the auto industry. nw

Chief Kim Chang-kyu of the Automobile and Shipbuilding Team of the Ministry of Commerce, Industry and Energy.