60th Anniversary of Nation's
Founding & Start of Green Car Future


Officials from the likes of Hyundai Motor, LG Chem, SK Energy and the MKE got together for a luncheon in a hotel in downtown Seoul. It seemed to be a common gathering, but what made it unusual was that the main topic was batteries. Automobiles and batteries, which have become two inseparable items, have the potential to be our "breadwinners"in the next few decades.
The Korean automobile industry is a representative growth engine behind the nation's economic development since Korea's liberation from Japanese rule. It has made strides, as Korea is expected to solidify its position as the fifth car production powerhouse after Japan, the United States, China and Germany with a projected 6 million units produced this year -- 4.2 million units in Korea and the remaining 1.8 million units abroad. Automobile exports are forecast to be worth a record high of more than $50 billion during 2008, with $26.7 billion worth of automobiles exported in the first half, making automobiles the largest export item.
However, the Korean automobile industry faces a stark situation these days. Record-high crude oil prices, which peaked at $147 per barrel, has dampened demand in the United States, the world's largest auto market, while domestic demand has grown a lower-than-expected 3 percent in the first six months of the year. The automobile industry is rapidly shifting its paradigm from an internal-combustion engine car to an environmentally-friendly one due to stricter environmental regulations in the wake of countermeasures against climate change. As Korean automakers are faced with cutthroat completion in the advanced countries as well as in the emerging BRIC economies (Brazil, Russia, India and China), they find it essential to foster Korean brands differently from others.
The domestic automobile industry has to adopt refined strategies and efforts to cope with such a crisis and translate changes into opportunities in a bid to make it a renewed growth engine. Celebrating the 60th anniversary of Korea's founding, the government unveiled a new vision for lower carbon emissions and green growth. Green growth refers to sustainable growth for reducing greenhouse gases and environmental pollution, and it is a new vision for creating growth engines and jobs through green technologies and clean energies.
In order to realize the two goals of addressing the industry's rapid paradigm change and pursuing green growth, the Korean automobile industry will have to aim to secure core and advanced technologies of environmentally-friendly, highly-efficient, green cars. The demand for going environmentally-friendly is not just a requisite for corporate survival, but a new growth engine we cannot miss. Pundits forecast that green vehicles such as hybrid cars and fuel cell cars will begin to replace internal combustion cars in 2010 and thereafter, and they will be replacements for all new cars to hit the streets by 2035.
In such automobile powerhouse countries as Japan, the United States and those in Europe, the government and the private sector are aggressively collaborating for the development of green cars. Japan is a dominant leader with companies such as Toyota and Honda taking a greater-than 90 percent share in the green car market. American automakers are working on the development of plug-in hybrid cars and alternative fuel cars to counter Japanese rivals with a focus on the early mass production of fuel cell cars in which they have a competitive edge. Late-coming European automakers are concentrating on the expansion of the clean diesel and diesel hybrid car markets. Each government's support for R&D activities and steps to stimulate the spread of green cars has become a great boon.
The Korean government formulated an act on the development and spread of environmentally-friendly cars in 2004 and has provided final support for R&D and the spread of green cars. Hyundai Motor plans to mass-produce LPG hybrid cars for the first time in the world next year, but Korea still falls far behind advanced countries in terms of technology.
At this juncture, the government, Hyundai Motor, battery makers LG Chem, SK Energy and SB LiMotive and the Korea Automotive Technology Institute assembled in one place and signed an MOU on the development of a battery for a plug-in hybrid car in the first phase of government/private sector collaboration. The Korean auto industry stands at a crossroads where we are sandwiched by front-runners and followers and the future of the industry will be determined by how we deal with it. If industry-wide high technology and potential is combined with the government's considered strategies and aggressive execution, odds are favorable that the Korean automobile industry will make Korea an affluent nation for another 60 years. nw

By Kim Chang-kyu
Director of Automobile & Shipbuilding Division at the Ministry of Knowledge Economy