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Automotive Industry in Korea
Volume 1 - Numéro 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KSD February 2001
1. Automobile output rose 10.9%
The output of automobiles in last September totaled 268,000 units an increase of 10.9 percent year-on-year in spite of a decrease in domestic demand. The production growth was helped by increased exports to North America and normal operations of Samsung Motors following its take over by French carmaker Renault. Passenger cars and commercial vehicles marked increases of 12.1 percent and 5.1 percent, respectively. Exports rose by 20% year-on-year in September to 149,000 units, (December 2000)
2. Korea's automobile exports to rise 30% this year
Korea's three automakers - Hyundai, Daewoo and Kia - are expected to enjoy a 30 percent growth in their sales in the United States this year. The Wall Street Journal said that due to low costs, long-term guarantees and improved quality, Korea-made automobiles have seen a 170 percent increase in sales over the past two years. The three firms have sold a combined 473,357 units in the United States in 2000, and this figure may swell to around 620,000 units this year. Hyundai Motor may witness a 15 percent growth, while Kia Motors and Daewoo Motors may witness increases in U.S. sales of 36 percent and 76 percent, respectively.(01/03/2001)
3. Sales of imported cars up 60% in 2000
In contrast to slowing local sales by Korean automakers in 2000, foreign car makers raised their sales in Korea last year by 60 percent year-on-year, according to estimates of the Korea Automobile Importers and Dealers Association (KAIDA). Their imports rose from 2,041 units in 1999 to 3,857 units in 2000. German cars accounted for 56.2 percent (2,221 units) vs. 27.2 percent (1,076 units) imported from the United States. At the beginning of this year, the K0AIDA projected that foreign car sales would grow from 2,401 units in 2000 to about 5,000 units this year and 8,000 units in 2002. (01/02/2001)
4. Weakening Won alerts industries
As the Won rapidly sheds its value against the dollar, industries with a lot of foreign debts or heavily dependent on imports are being alerted to safeguard their profit margins. The Won which traded at around 1,100 Won to the dollar by the middle of last month has sharply fallen to the 1,250 range. Experts warn that sudden fall in the value of the Won will benefit no one because it will lead to the deterioration of the Korean economy's international credibility. (01/02/2001)
5. Auto sales sluggish for 2 consecutive months
Three domestic automakers said recently that their sales dropped in December for the second consecutive month. Hyundai Motor's sales slipped 7.1 percent on the domestic market and 13.3 percent in exports in last December. Daewoo Motors marked decreases of 6.1 percent on the domestic market and 24.2 percent in exports. Kia Motors marked a decrease of 5.4 percent in sales on the local market but an increase of 26 percent in exports in December from the previous month. (01/03/2001)
6. Institutions call US$10 billion trade surplus this year too ambitious
While the government targets this year's trade surplus at US$10 billion, major economic institutions including the Bank of Korea, the Korea International Trade Association (KITA) and the Korea Institute for Industrial Economics and Trade (KIET) say that the target is too ambitious in view of such unfavorable business conditions as business slow-down in the United States, falling prices of semiconductors on the world market, and the domestic economic slump. (01/03/2001)
7. Chaebols greet New Year with reform pledges
Leading industrial conglomerates resumed their businesses after the New Year holidays, pledging to drastically upgrade profitability, improve cash flows and competitiveness this year. Viewing the looming business downturn as a new opportunity, heads of the Samsung, Hyundai, LG, SK and Hyundai Motor groups all said that they would push for competitiveness-oriented restructuring throughout the year. Despite their concerns over cash flows, the top groups also plan to continue to pump investment money into promising business sectors. They also demanded that the government pay greater attention to labor market flexibility, deregulate and narrow the income gap, while stressing management innovation, technology development and business transparency on the part of private enterprises. (01/03/2001)
8. Medium-sized car market heats up
Despite the cold weather gripping the nation, the medium-sized automobile market has begun to heat up, with major car manufacturers locked in intensifying competition. Hyundai Motor, Kia Motors and Renault-Samsung Motors are in an all-out struggle to take the lion's share of the market with their new models. So far, Kia has been leading the market boosted by the brisk sales of its Optima, which registered sales of 4,813 units as of last December. Kia's Optima has become the best seller in the market, outperforming Hyundai's EF Sonata for two straight months since November. To catch up with Kia, Hyundai is poised to launch a new model of EF Sonata soon. (01/03/2001)
9. Korean Cars capture 2.7% of US market
The New York office of the Korea Trade-Investment Promotion Agency (KOTRA) said on January 4 that Korean car makers' share in the U.S. auto market increased to 2.7 percent last year. The best selling model turned out to be the Avante sold under the brand name of Elantra in the United States. Hyundai, Kia and Daewoo sold a total of 473,357 units in the U.S. last year, an increase of 43.6 percent from a year earlier according to the KOTRA's New York office, quoting data released by Auto Data published in the USA. (01/05/2001)
10. Car importers adopt innovative marketing strategy
Car importers have been adopting innovative marketing strategies in order to raise their shares on the domestic market. Korea's foreign car imports are expected to hit 7,000 units this year. BMW Korea has so far been leading importers of foreign cars and in an attempt to maintain its lead established by selling 1,600 units last year, it is to launch a market promoting events this month, including payments on behalf of purchasers of acquisition and registration taxes amounting to 2.1 million to 15.million won per unit. (01/09/2001)
11. Sales of large-sized cars up 28% in 2000
Sales of large-sized passenger cars on the domestic market rose 28 percent last year year-on-year but those of compact cars rather fared poorly, according to the Korea Automobile Manufacturers Association. Sales of large-sized cars with an engine displacement of 2,000-cc or more reached 74,824 units - up 28.2 percent from last year, while sales of mid-sized cars between 1.500cc and 2,000cc rose 12.8 percent to 223,649 units last year. Sales of small cars below 800cc, however, plunged 28.3 percent from a year earlier to 92,697 units last year, (01/13/2001)
12. BSI marks a 30-month low, says FKI
The Federation of Korean Industries says its business survey index marked a 30-month low of 62.7 in January since July of 1998 when the index stood at 60. Shipbuilding and marine industries only marked the BSI of more than 100, while automobiles recorded a mere 29.4, reflecting a gloomier outlook for domestic demand for automobiles. (01/15/2001)
13. Korea to rank 4th in world car manufacturers
Korea's automobile output this year is expected to rise 3.6 percent year-on-year to 3.23 million units this year, overtaking France as the fourth largest automobile manufacturer, according to the Korea Automobile Research Institute (KARI). Domestic car sales would rise 1.3 percent to 1.45 million units, while exports are expected to jump 6.7 percent to 1.78 million units. (01/18/2001)
14. Car exports to Europe up in 2000
Korea Trade Investment Agency announced on January 5 that exports of domestic automobiles to the 25 EU nations and Norway, Iceland and Sweden increased to 504.979 units last year, up by 26,245 units from 1999. Hyundai Motor sold 227,000 units. (01/26/2001)
15. Auto industry marks record trade surplus of US$15 billion level last year
The Korea Automobile Manufacturers Association (KAMA) says that Korea's automobile trade surplus last year would have attained a record US$14.8 billion, thereby accounting for nearly all of the nation's trade surplus that year. In the first 11 months of 2000, exports and imports amounted to US$15.4 billion and US$2.1 billion. Respectively, while December 2000 surplus was estimated at US$1.5 billion. (01/29/2001)
1. Hyundai Motor Group posts record high profits
The Hyundai Motor group's four affiliates, including the parent company, recorded 768.6 billion won (US$660 million) in net profits during the first nine months of last year. Hyundai Pipe is the only affiliate that incurred a deficit during the period of US$16.4 million. Hyundai Motor's profit during the period stood at US$452.8 million vs. a net surplus of US$414.3 million marked in the same period 1999. Sales during the first nine months of last year amounted to US$13.94 billion, including 7.96 billion in domestic sales and US$5.13 billion in exports, accounting for 91.9 percent of last year's total sales. (December/2000)
2. Hyundai-Kia to set up headquarters in China
On November 24, 2000, Hyundai Motor and its affiliate Kia Motors said they would jointly set up a Chinese headquarters in Beijing on December 1. 2000 in order to more aggressively advance into pan-Chinese market including Taiwan, Macao, Mongolia and Hong Kong as well as the mainland. They will also establish local manufacturing plant in China to manufacture five kinds of vehicles - subcompact cars, compact cars, vans (recreational vehicles) buses and commercial vehicles - at the earliest possible date. (December/2000)
3. Hyundai Motor's Santa Fe, Grandeur XG fare well in USA
Hyundai Motor has brisk exports of Santa Fe, its sports utility vehicle (SUV) along with its Grandeur XG models since they models were exported beginning in September 2000. The company says it sold a total of 6,476 units of SUVs in last November, 406 units in September, 2,443 units in October and 3,667 units in last December. The good news of its continued growth was brought home by its U.S. financial affiliate, Hyundai Motor Finance Co. which was established in 1990 to help finance purchases of Hyundai cars on an installment basis. (December/2000)
4. Hyundai and Kia Motors share new office building
Hyundai and Kia Motors officially moved into a new office building in Yangjae-dong in southern part of Seoul on December 27, 2000. The Kia Motors was merged with Hyundai Motor in the summer of 2000 to promote synergy effects. HMC also set its 2001 export target at one million units - up over 20 percent from 2000 which marked a 20 percent growth over 1999. Hyundai Motor set a sales goal for the year 2001 at US$16.65 billion with US$800 million in before tax profits. (January/2001)
5. Hyundai Motor Group promotes executives
Hyundai Motor Group says that it recently promoted 102 executives - 61 at Hyundai Motor, 28 at Kia Motors, and 13 at Hyundai Mobis. Executives in the marketing divisions were given priority as the group achieved all-time high records in sales last year. In particular, Chung Eui-sun, the eldest son of Hyundai Motor's chairman Chung Mong-koo, was promoted from a director to an executive managing director. (February 1/2001)
6. Hyundai Motor Group eyes 35 trillion won turnover this year
The Hyundai Motor Group, spun off from the Hyundai Group last September, says that its auto sales will be raised by 10 percent this year to a total of 3.2 million units so as to attain a total turnover of 35 trillion won (US$29.16 billion). Hyundai Motor Group chairman Chung Mong-koo said in his New Year message that Hyundai Motor & Kia Motors will strive to sharply upgrade their productivity this year under a long-term strategy to emerge as one of the top five automakers in the world by the year 2005. Last year Hyundai Motor sold 1.86 million units for 22 trillion won in turnover, while Kia Motors attained 13 trillion won from sales of 1.6 million units. (01/02/2001)
7. Hyundai-Kia target domestic sales of 1.05 million units
Kia Motors says that its marketing-related officials from across the country resolved to sell 430.000 units at home this year. Kia sold a total of 408,339 units in Korea last year. Its target represents domestic market share of 32 percent this year. Earlier on January 5, Hyundai Motors adopted a plan at its New Year's rally to target its sales this year at 620,000 units or 45 percent of domestic market share this year. (01/09/2001)
8. Kia Motors to recall Carnival, Carens
The Construction and Transportation Ministry said on January 9 that Kia Motors would recall its Carnival and Carens models as defects were found in both models. Chains of the Carnivals' oil pumps could break during rapid acceleration and deceleration. The Carens' engines could stop suddenly while the vehicle is running due to problems of fuel ratio. The recall will affect 100,331 Carnivals manufactured during December 1997 - June 2000 and 10,060 Carenses produced between June and December 2000. Kia will inform owners about the recall and make the necessary changes free of charge at its maintenance shops. Repairs of the Carnivals and the Carenses will begin from January 31 and January 20, respectively. (01/10/2001)
9. Hyundai Motor rolls out mid-sized EF Sonata
Hyundai Motor on January 9 rolled out the successor model to the mid-sized sedan EF Sonata, which was the best selling vehicle last year, as part of its drive to attain a local sales target of 620,000 units this year. The new EF Sonata is outfitted with a larger body frame, the same size as the larger deluxe sedan Grandeur XG. The new model also features a variety of advanced safety and comfort systems, including a state of art anti-lock brake system. (01/10/2001)
10. Hyundai founder Chung disposes of stake in Hyundai Motor
The Hyundai Group announced on January 10 that its founder and former chairman Chung Ju-yung has completely divested himself of his stake in Hyundai Motor by disposing of his remaining 0.97 percent stake or 2.87 million shares. (01/11/2001)
11. Hyundai-DaimlerChrysler's joint venture due in April
Hyundai and DaimlerChrysler are to set up a joint commercial vehicle plant in Korea, Hyundai Motor Chairman Chung Mong-koo said on January 12. Chung said that the two partners will each hold 50 percent equity in the project which will be tentatively named as Hyundai-Star Commercial Alliance, He also noted that Korean Commercial vehicles account for a mere 1 percent of the global market, while their domestic market is suffering from a supply glut. "Hyundai and DaimlerChrysler are determined to turn Hyundai-Star Commercial Alliance into their commercial vehicle manufacturing base for the Asian market including China. The projected joint venture is expected to produce 120,000 units of trucks and buses a year initially. (01/13/2001)
12. Construction of Hyundai Motor's plant in USA to be delayed
Hyundai Motor's plan to build an auto assembly plant in the United States by the year 2004 will be somewhat delayed, Finbarr O'Neill, president of Hyundai Motor America told reporters at the recent Detroit Motor Show. (01/18/2001)
13. Hyundai Motor eyes stake in DaimlerChrysler
Hyundai Motor Korea made proposals for taking an equity stake in DaimlerChrysler as part of its alliance, the Financial Times of the United Kingdom reported on January 23. The British paper said that Hyundai Motor proposed that it would acquire a certain portion of DaimlerChrysler's shares in return for DaimlerChrysler's raising its stake in Hyundai Motor from the current 10 percent to more than 15 percent. For its 10 percent equity in Hyundai Motor, DaimlerChrysler paid US$428 million last year and was given an option to acquire 5 percent more within three years. (01/19/2001)
14. Hyundai Motor head discusses auto project with Brazilian president
Hyundai Motor-Kia Motors Chairman Chung Mong-koo on January 19 met with visiting Brazilian President Fernando Henrique Cardoso to discuss issues related to Kia Motors investment in Brazil of US$150 million to build a car assembly plant with an annual production capacity of 30,000 units. (01/20/2001
1. 20,000 Daewoo cars to be exported to Indonesia
The North Cholla Provincial Government says 20,000 units of commercial cars and buses manufactured by Daewoo Motors will be exported to Indonesia during the period 2001 - 2003. Provincial Governor Yu Chong-kun and officials of DTD Organda Corp., Indonesia's public transportation agency, have agreed to formally sign an agreement shortly for the export of the automobiles for about US$110 million. (December/2000)
2. GM to submit new bid for Daewoo Motors plants
Industry sources say that the GM-Fiat Consortium submitted a new bid to take over Daewoo Motors plants piecemeal. Rick Wagoner, president and CEO of GM, recently met with his Fiat counterpart Roberto Testore to discuss their possible breakup of Daewoo Motors: GM will take over most recently built motor plants in Kunsan, while Fiat will take over Daewoo's auto plants in Europe. (December/2000)
3. Daewoo Motors' survival still remains uncertain
On November 30, the Inchon District Court approved the court receivership for debt-ridden Daewoo Motors which had been on the verge of liquidation and assigned Lee Jong-dae, chairman of Daewoo Motors as its representative manager. Consequently, Daewoo's major Pupyong plant, which has been idle since November 8, 2000, is now expected to resume operations in early December. Marketwatchers say, however, the future of the company is still uncertain, unless its ineffectiveness is removed. In the first half of 2000, Daewoo Motors' cost of goods sold to sales ratio registered 92.96 percent vs. 78.4 percent of Hyundai Motor, Korea's top automaker. Also, there is a report that each sale of Matiz, its popular mini car model, adds a loss of US$2,140 to the company's book. Nonetheless, Daewoo continued unreasonable management with financial support from its creditor banks, instead of revamping its profit structure. Above all, Daewoo Motors' easy going attitude was problematic. The operating ratio of its auto plants had fallen sharply but the number of its employees has shown only a slight decline. Creditors explained that they had to opt for bankruptcy of Daewoo because its trade union rejected the restructuring plan, including layoffs of excessive workers. (December 2000)
4. Daewoo Motors' trade union resists layoff plan
The trade union of Daewoo Motors is seeking to resort to general strike to frustrate a massive layoff plan. Earlier, Daewoo Motors has adopted a plan to layoff a total of 6,884 employees, including 1,390 office workers and 5.494 production line workers so as to save up to 234 billion won this year - a measure deemed essential for its survival. (01/02/2001)
5. Daewoo Motors submits large-scale layoff plans
Daewoo Motors, which is under the receivership of the Inchon District Court, has submitted a plan to layoff 2,794 production workers to the Inchon district court. Daewoo Motors was expected to receive voluntary resignations by the end of this month. The layoff plan includes workers from Ssangyong Motor and after-sales service divisions. (01/03/2001)
6. Daewoo Motors once again suspends Bupyong plant operation
Daewoo Motors has once again suspended the operation of its Bupyong Plant on January 31, 2001 as some of its component suppliers stopped operations, demanding immediate payments of their salaries, which are in arrears for three months. (01/03/2001)
7. Daewoo International eyes relisting on KSE
Daewoo International, the trading division of the Daewoo Group, says efforts are being made to relist its shares on the Korea Stock Exchange on this February 13. The firm completed the split-off of its related subsidiaries last year, plans to fully normalize its operations this year. It hopes to graduate from its workout program in the year 2002 or one year ahead of its original plan. It targets this year's turn over at 7.38 trillion won, with 94.7 billion won in current profits. "We plan to export US$4.784 billion worth of automobiles and components, industrial plants, and products manufactured by minor enterprises," its president Lee Tae-Yong told reporters. (01/03/2001)
8. GM expected to submit new terms for takeover of Daewoo Motors
General Motors is expected to submit its latest terms by the end of this February for the takeover of Daewoo Motors, according to Uhm Nak-yong, the chief creditor-bank of Daewoo Motors, on January 15. GM is now expected to discuss concrete terms for its acquisition of Daewoo Motors once Daewoo Motors completes its restructuring plans with its creditor-banks. Executives of the KDB say that negotiations with GM for the sale of Daewoo Motors will be completed within the first half of this year. (01/03/2001)
9. Ssangyong Motor faces separate selloff apart from Daewoo Motors
Chohung Bank, a main-creditor of Ssangyong Motor, plans to selloff the cash-strapped automaker separately from its parent firm Daewoo Motors, a ranking official of Korea Development Bank said on January 3. He said that GM is not interested in Ssangyong. Daewoo Motors creditors are now planning to selloff four Daewoo affiliates including Daewoo Motors, Daewoo Motors Sales, Daewoo Capital and Daewoo Telecom separately. Meanwhile, Daewoo Motors laid off 3.555 workers recently, meeting 52 percent of its ultimate downsizing goal. (01/09/2001)
10. Seoul wants GM to make decision on Daewoo Motors shortly
Amid the rising concerns over the delayed sale of Daewoo Motors, Minister of Finance & Economy Jin Nyum said on January 12 that General Motors, the sole bidder for the ailing Daewoo Motors is now expected to announce its decision by the end of this February, if only its management and trade union work out on a bona fide restructuring plan shortly. However, he warned that sputtering restructuring efforts would only tend to prompt GM and its consortium partner Fiat to pullout their joint bid, just as Ford did last September. (01/13,2001- This situation is not very clear and in last minute, we have been told about the change of GM concerning this matter. See our next newsletter in March)
11. Daewoo Motors workers press for criminal probe of Kim Woo-jung
The trade union of Daewoo Motors workers has decided to file a formal charge against Kim Woo-jung, former chairman, with the Seoul District Prosecutors' Office on charges of misappropriation of company funds, dereliction of duties and violation of foreign exchange law. It said that its decision was prompted by the failure of the prosecution office to take legal steps against Kim, although the Financial Supervisory Service found that Kim had misappropriated 22.9 trillion won of company funds through falsification of company documents. (01/15/2001)
12. Ssangyong Motor to hire consulting service firm
Ssangyong Motor said on January 14 that it would select a consulting service firm shortly to obtain advices in companywide restructuring and facilitating overseas sales of its products. With General Motors believed to have little interest in the sports utility vehicle maker, Ssangyong's main creditor Chohung Bank has been moving to sell off Ssangyong to its technology partner DaimlerChrysler. (01/15/2001)
1. Renault-Samsung enjoys rise in sales
After officially launching as a joint venture in September 2000, Renault-Samsung Motors has been experiencing rise in sales. The sales of its key model, S5, jumped to 3,800 units in September and over 4,000 units in October. It had been selling at an average rate of 1,400 units a month earlier in 2000. It plans to emerge as a major automobile provider in Korea by the year 2002. (December/2000)
2. Renault-Samsung gearing up for growth
Renault-Samsung Motors will be reborn as a general carmaker under a strategy to utilize Samsung's brand power, together with Renault's capital and management know-how and Nissan's technology. Currently, the Busan plant's annual capacity stands at 240,000 units. But the company plans to add four to five models to its production line by the year 2006 and will more than double its capacity to about 500,000 units. Renaullt-Samsung is capitalized at 440 billion won, with the Renault Group having a 70.1 percent stake and Samsung 19.9 percent equity. The remaining 19 percent is owned jointly by Samsung Motors' creditor banks. (January/2001)
1. Dongyang Mechatronics to export US$13 million worth of auto parts to USA
Dongyang Mechatronics Co. will export US$1.3 million worth of power window motors to Ford Motor as a result of its participation in an international tender held by Ford. Also participating in the Internet bidding were10 world-class auto parts makers from Japan, the00 United States, and Europe, including Bosch and Denso. The Korean auto parts firm had won QS9000 certification in 1999 and will supply Ford with 1.5 million power window motors. (January/2001)
2. Knockdown car exports drop
Exports of cars on a knock-down basis in November 2000 by nation's four major automakers (Hyundai, Kia, Daewoo, and Ssangyong) totaled 8,979 units - down from 10,791 units in October. Thus, the aggregate of knockdown exports in the first nine months of last year stood at 218,246 units - down 10 percent from the same period in 1999. (January 2001)
3. Xenon white bulbs
Taewoo Halogen Co. in Inchon has been offering white beams with blue color. This product makes the car grill appear more luxurious. It has more brightness and casts its light further than ordinary headlights. With a monthly production capacity of 300,000 units, the firm is ready to meet big orders with quick delivery, within 21 days after confirmation of order. The minimum order is 1,000 bulbs. (January/2001)
4. Oil filters
Dongwoo Industry Co.'s oil filters are furnished to Japanese and Chinese carmakers on an OEM basis. Focusing on zero defect production, this firm maintains a failure rate of under 100ppm. Acquiring QS 9000in 1999, it is equipped with advanced testing equipment, including multi pass, impulse, element bubble, viscometer testers and cold chambers. With its automated production facilities such as tapping machines, conveyer systems and automatic seaming, it has a monthly production capacity of 2 million oil filters, 900,000 fuel filters, 45,000 air filters. (January/2001)
5. Pistons for 2000cc RVs
Dongyang Pistons Co. in Ansan, Kyonggido, supplies diesel pistons to domestic car makers of 2000cc recreational vehicles. They have bushed pinholes and a ring carrier in the top ring groove and their skirt is printed with graphite. Having acquired QS9000, the firm seeks foreign OEM clients for its products. Equipped with in-house-developed production facilities for melting, casting and measuring, its products are at least 30 percent lower than their counterparts in Japan and the EU. (January/2991)
6. CP Type Clutch Covers
CP type clutch covers manufactured by Valeo Pyeong Hwa Co. of Seoul utilize fulcrum plates instead of wire rings, so they compensate for property changes caused by gaps from abrasion. Their impact-resistant stud pins prevent product deformation and protect their constituent parts. As a result, they maintain uniform performance even after long use. Moreover, their superior release decrease pedaling, resulting in smoother gearshift, clutch adjustment, and more comfortable driving. It also offers high-quality pre-damper clutch discs, non-asbestos clutch facings, release bearings and dual mass flywheels. (January/2001)
7. Car engines
Dealing in all kinds of Hyundai and Kia engines, Paul Trading Corp. supplies products to after-sales markets in Latin America, Asia, etc. Hyundai gasoline engines (SOHC and DOHC) range in displacement from 0.8 to 4.5 liters and diesel engines (2.5 to 17.8 liters). Hyundai engines are compatible with any kind of vehicles produced on small capacity assembly lines. (January/2001)
8. Aircon heater "doctor"
Okay Co. of Seoul has been supplying aircon heater "doctor" which don't have any effect on the evaporator, a major cause of bad smells. This product not only sterilizes bacteria and molds on aircirculation devices but also effectively deodorizes a car's interior. Compared with its Japanese counterpart, this product provides better performance and sells for less money. (January/2001)
9. Antitheft devices
Nam Ryang trading Co. of Seoul supplies a unique four-wheel locking system - Hold Parking system which makes it impossible fo0r anyone to move a car utilizing the system, without knowing how to unlock the device. Taking only about 20 mines, the system is easily installed under the hood without damaging the car. It is unlocked by the car's remote controller. It is applicable to cars, buses, trucks and/or heavy-duty construction equipment. (January/2001)
10. Remote-controlled anti-hijack car alarms
Dongyang Security Electronics Co. of Inchon supplies PRO-V, compact anti-hijacking car alarms. It has a transmitter that operates at 175ft. Dual 2-button transmitters provide a 2nd car alarm as well. It also has remote panic, arming and disarming and chirp confirmation functions. PRO-V lets users select either passive or active arming. The siren operates for 60 seconds, with an automatic reset, but for 4 minutes if the door is left open after an intrusion. Optional functions include electronic impact detection, trunk and hood opening detection, starter interruption and remote door lock. (January/2000)
11. Intelligent headlights
Ssotech Korea Corp. of Taegu supplies intelligent headlight lamps. Consisting of 2 lamps moving respectively to the right and left by 45 degrees, a control box sensor, a switch and wires, this product (ET LAM) ensures safe night driving by correctly detecting the wheel's movement and letting the driver investigate a curve in advance. When set on automatic, the headlights turn on only if necessary (such as entering a curve) and eliminates the light's dead ground. In manual mode, it scatters the light 180 degrees in the driving direction and continuously removes the dead ground. So the manual mode is the most suitable for driving on rural lanes and rough roads as well as in foul weather. (January/2001)
Automotive Industry in Korea
Volume 1 - Numéro 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KSD January 2001
1. 2001 exports to attain 20% growth in IT sector vs. less than 10% in other sectors
The Ministry of Commerce, Industry and Energy says Korea's IT (information technology) sector may witness a 20 percent export growth this year vs. an average of 10 percent growth in the other sectors including vehicles, vessels, steel and home appliances due chiefly to their diminishing demand overseas. Nevertheless, the nation is expected to attain an annual trade surplus of $10 billion in the year 200l on total exports of $191 billion and imports of $181 billion.
2. FKI's chairmanship being shunned
The English daily Korea Herald noted recently that chairmanship of the Federation of Korean Industries is being shunned by heads of Korea's business conglomerates since the outbreak of the foreign exchange crisis in late 1997, perhaps influenced by slumping business and growing government pressure for economic reform. The federation is to elected its new chairman at a general meeting slated for February 15 this year when the tenure of incumbent chairman Kim Kak-choong's tenure is to expire. However, no candidates are on the horizon as yet. In fact, the heads of the four major conglomerates - Hyundai, Samsung, LG and SK - have been boycotting the monthly meeting of the organization's chairmanships for over two years, although they account for 70 percent of the FKI's total annual membership fees.
3. KCCI says Korea's economy to falter visibly
Influenced chiefly by the bleak prospects in the automobile, steel, oil refinery and textile sectors, Korea's economy is likely to witness faltering visibly in the year 200l, the Korea Chamber of Commerce & Industry (KCCI) has predicted.
4. Local conglomerates enjoy record high surpluses in 2000
According to Maeil Kyongje, such business conglomerates as Hyundai Motors, Kia Motors, SK Telecom, Korea Telecom, POSCO, and KEPCO would have enjoyed record high surpluses last year thanks to restructuring efforts including downsizing manpower, cuts on operation costs and sales of affiliates. Hyundai and Kia Motors are likely to witness 600 billion won and 340 billion won worth in black, respectively, due to rising exports and cutback in research and development outlays.
5. Facility investments to slow in 2001
The annual growth rate of Korea's facility investments is likely to slow down in the year 2001, while bipolarization of industries will expand, according to a recent survey conducted by the Ministry of Commerce, Industry and Energy. The ministry surveyed a total of 200 manufacturing industrial firms and found that they planned to invest a total of 29.8 trillion won this year - up just 10.8 percent from the year 2000 which marked a 24 percent growth from the year 1999. The less than one-half growth projected for this year has been influenced by unfavorable 2001 outlook for exports, domestic consumption propensity and depressed economic growth potential. The shipbuilding industry, however, is expected to mark an annual growth of 46.4 percent this year over last year due to increasing overseas orders.
6. Unemployment rate up in November
The seasonally unadjusted unemployment rate rose to 3.6 percent in November 2000 - up 0.2 of a percentage point from October thereby serving as a precursor to tougher labor conditions in the coming months, the National Statistical Office (NSO) said recently. The seasonally adjusted rate also rose to 4.1 percent in November from the 3.9 percent posted in September. Consequently, the economically active people dropped half a percentage point to 61.1 percent in October.
7. Seoul Motor Show withheld
The Korea Automobile Manufacturers Association has postponed its Seoul Motors Show originally scheduled for this March to November 21 - December 1, 2002. The association says that the postponement was necessary inasmuch as bankrupt Daewoo Motors and Ssangyong Motors are now unable to participate, while many would-be foreign participants also opted for its postponement. The Soul Motors Show was held every two years since 1995.
8. Domestic car sales to drop by 3.5% this year
Domestic car sales may witness a decrease of 3.5 percent year-on-year in 2001 in the face of the slowing economy and uncertainty about industry-wide restructuring, Hanwha Securities said recently. However, the downturn in domestic sales will be somewhat offset by an estimated 1.2 percent increase in exports, it noted. Hanwha added that it will hold a neutral position in the investment in the automotive shares except for Hyundai Motors and Hyundai Mobis shares.
9. 2001 business downturn in major industries probable
The Korea Chamber of Commerce & Industry says business downturn in Korea's major industries including automobiles, steel and construction in the year 2001 is probable, due chiefly to negative effects from corporate credit crunch, sluggish consumption and slowing overseas economies. In contrast, electronics, general machinery and shipbuilding industries are likely to stay in a better shape in 2001, the chamber noted.
10. Bush may favorably sway Korea's exports to USA
Advocating free and fair trade, the inauguration of Bush Administration is expected to positively influence Korea's exports to the United States this year. But the pressure to open the Korean market for automobiles will get stronger according to a recent report from KOTRA.
11. Korea' GDP placed within upper echelon of OECD members
Korea placed itself in the upper echelon of the OECD member nations, despite being its youngest member. The National Statistical Office says that Korea's GDP ranked 10th among the OECD member nations in 2000 - up two notches from is standing in 1998. Per capita GDP at US$8,680, came in 24th - unchanged from1998. Nonetheless, Korea came out on top of the OECD with its 10.7 percent GDP growth rate of last year. Korea's stake of 39.4 percent in the OECD's shipbuilding market stood only second to Japan's 45.7 percent.
12. Exports of automobiles on CKD-basis down
Korea's exports of automobiles on a CKD-basis (complete-knock-down)-basis dropped by 43.1 percent in November last year from the previous month, according to the Korea Automobile Manufacturers Association. Exports of automobiles on a CKD-basis from the four firms - Hyundai, Daewoo, Kia and Ssangyong - totaled 8,799 units in November down from 10,791 units in October.
13. Korea's exports will slow to 12 percent
Hit by global economic slumps, the year-on-year growth rate in Korea's exports will slow to 12 percent to 13 percent this year from last year's 21 percent to 23 percent, the state-run Korea Trade-Investment Promotion Agency (KOTRA) said recently. It noted that Korea's exports will hit US$200 billion vs. last year's projected US$174 to US$178 billion. Exports to the United States are expected to decline this year, due to sluggish performances of the steel and textile industries, irrespective of strong performances of electronics, computers, cars and wireless telecommunication devices.
14. FKT says weak won will not help exports
Contrary to conventional wisdom, the latest plunge in the value of the won may negatively affect domestic exporters' profitability, according to the Federation of Korean Industries. It said in a report that the simultaneous weakening of the won and the yen against the U.S dollar along with rising costs of imported raw materials and the signs of hard landing of the U.S. economy are expected to offset positive effects of the weakend won. Reflecting the increasingly dismal sentiment, the FKI-compiled business survey index, or BSI, for December fell to a 28-month low of 68, meaning that local business conditions may deteriorate by 32 percent from October.
15. Korea liquidity crunch far from over
Korea's risk of liquidity crunch is far from over, and the Korea's corporate financing need in 2001 will be a test for the government, Standard & Poor's said in a report released on December 20. "It will be difficult to meet the sizable volume of the corporate market demand for the next month, and to meet its even greater need by the end of 2001," the U.S. rating agency added that the Korean government seems to be tackling the approximately 14 trillion won worth of bonds maturing by the end of this year with the proper seriousness.
1. Hyundai's Avante passes U.S. collision test
Hyundai Motor says its Avente model compact sedans have received an excellent evaluation from a low-speed collusion test conducted by the U.S. Insurance Institute for Highway Safety. Among the 11 compact sedan models tested by the institute, Advente placed third ahead of its rival Toyota Motor's Corona.
2. Kia Motors marks visible increase in sales
Kia Motors Corp., which graduated from court management in February 2000, launched three new models, recorded the highest monthly sales figures and is gaining popularity in overseas markets. The company is likely to have marked the highest profits in the year 2000. It had marked exports of 500,000 units and domestic sales of 350,000 units during the year 1999 and netted an overall profit of 8.6 trillion won.
3. Hyundai Motors and Kia Motors relocate to southern Seoul
Hyundai Motors and Kia Motors relocated to Yangjaedong, southern Seoul from Kyedong, northern Seoul, thereby ending the 17-year long Kyedong era. The two firms will finish moving by the end of January 200l.
4. Hyundai group chairman to invest 78.3 billion won in Hyundai Construction and Engineering Co
Hyundai Construction and Engineering Co. says that Hyundai group founder Chung Ju-yong will inject the 78.3 billion won he raised through the sale of his stake in Hyundai Motor Co. into Hyundai Construction and Engineering Co. This will raise his stake in Hyundai Construction and Engineering Co. from the current 11.45 percent to 15.51 percent on December 5, 2000.
5. Kia Motors buys back 36 million shares of company stocks
Kia Motors says that it bought back 36 million of its own shares in December 2000 for cancellation. At a meeting of shareholders on September 20, 2000, it was decided that the company should gradually buy back and retire a total of 80 million shares to better manage their prices. After the company bought back the shares, Kia shares traded at 5,800 won per share.
6. Hyundai Motors sees 20 trillion won in turnover in 2001
Hyundai Motors says that it is targeting a net profit of 1 trillion won on an annual turnover of 20.4 trillion won (US$16.6 billion) in 2001. Under its business plan for 2001, Hyundai aims at raising its overall sales by 8 percent from 2000 to 1.05 million units, including domestic sales of 670,000 units and exports of 1.05 million units. The one trillion won before tax profit represents 5 percent of total turnover, while the projected 1.05 million units of exports represents 2 percent of the global market.
7. Kia Motors eyes exports of 720,00 units this year
Kia Motors says it plans to export a total of 720,000 units this year - up 28.6 percent over the year 2000. Its this year's export target was disclosed at a meeting attended by its chairman Chung Mong-ku, president Kim Soo-jung and overseas managers. It was also announced at the meeting that Kia Motors will launch a series of campaigns to further promote overseas sales this year.
8. Kia Motors issued 200 billion won in corporate bonds
Kia Motors issued 200 billion won worth of corporate bonds on December 26, 2000. To be matured within two years, proceeds from the bonds will be used to finance operations of Kia Motors. It was the first issuance of corporate bonds by Kia since it went bankrupt in July 1999. The bonds will carry a spread of 0.4 of a percentage point on the top of interest prevailed as of December 26. The bonds were rated as BBB plus by domestic credit rating agencies. Kia Motors is the fourth firm to secure access to the bond market of the Hyundai group, the other three affiliates being Hyundai Motors, Hyundai Heavy Industries and Hyundai Mobis.
9. Hyundai denies plan to utilize Daimler Chrysler's plants
Hyundai Motors Co. on December 15, 2000 denied a news report that it has been considering a plan to manufacture its cars at Daimler Chrysler's plants in North America. A high-ranking Hyundai Motors' official said, "We have not a concrete plan to manufacture our cars in the United States. The British wire service Reuters reporter earlier in the day that Hyundai was reviewing a plan to use Daimler Chrysler's idle production facilities in the United States.
10. Hyundai Motors' 3 models fare well in USA
Hyundai Motors said on December 17 that its sports utility vehicles including Santa Fe and the Grandeur XG models showed brisk sales in the United Sates, following their introduction in last September. Hyundai sold a total of 6,476 units of the sports utility models as of the end of last November, 406 in September, 2.443 in October and 3,627 in November.
11. Hyundai Motors may mark 9% growth in sales this year
Despite an anticipated decline in domestic car demand, Hyundai Motors is expected to witness a 9 percent growth in turnover this year, according to Credit Suisse First Boston (CSFB) on December 18. It said that Hyundai's domestic sales have been on the decline since last August. Month on month, its revenue fell 13.8 percent in August, 1.8 percent in September, 11.4 percent in October and 9.0 percent in November. This year the domestic market for automobiles is likely to shrink 5 percent from 2000 due chiefly to business slowdown and lack of new models. However, Hyundai Motors' revenue are expected to grow 9 percent this year, thanks to cutback in output by Daewoo Motors and the growing popularity of the Santa Fe which was launched in the United States successfully in last October.
12. Hyundai Group to renounce aircraft project
The Hyundai Group appears to be giving up its aircraft project, bringing its legal problems with Boeing Co. to a close, industry sources said on December 22. Both sides agreed to drop law suits and Hyundai has already turned over its aircraft project to an integrated corporation. Both Hyundai and Boeing agreed to settle their dispute out of court. Consequently, Hyundai will manufacture only 50 wing units for Boeing's B717-200 out of 250 that Hyundai Space & Aircraft Co. was to supply to the U.S aircraft manufacturer.
1. Daewoo to be dissected into individual units
The government says that the Daewoo group will be dissected into individual units shortly. Finance & Economy Minister Jin Nyum, Financial Supervisory Commissioner Lee Kun-young, and Presidential Economic Advisor Lee Ki-ho in early last month decided to dissect the group into business units by December 15, but it has been delayed due to negotiation difficulties with its overseas creditors. In last July, Daewoo Corp. had agreed to split into Daewoo Construction and Daewoo International while the rest of its business units remain under Daewoo Corporation. The company's overseas liabilities stand at US$3.8 billion. In addition, the corporation also holds US$163 million that it guaranteed for Daewoo Motors.
2. Daewoo Motors eye cutback in manpower
Daewoo Motor submitted to its trade union recently a manpower structuring plan designed to reduce its workforce by up to 6,800 persons - or some 40 percent of its total workforce. But the trade union refused to comply with the cutback plan, demanding readjustment through consultation with the trade union. Its management wants to lay off a total of 6,846 employees, including 5,374 production workers working at the Bupyong, Kunsan, and Changwon plants. Daewoo management notes that it would be possible to cut costs by one trillion won through the workforce cut and other measures including reduced investment and inventory.
3. GM's CEO still interested in acquiring Daewoo Motors
CEO of General Motors said recently that his firm is still interested in acquiring Daewoo Motors, despite plans to lay off 160,000 workers. At a meeting with reporters on November 13 last year, President Wagnor said GM is still interested in taking over Daewoo Motors and yet he denied a quick deal with Daewoo creditors. GM began negotiations with Daewoo with Daewoo creditors last year and agreed to jointly take part in an auction in last June with Fiat of Italy but pulled out a few months later.
4. Daewoo Motors default taking toll on local cars
Due to a host of local negative factors including the problems at the Daewoo Motors Co., the shutdown of Samsung Motors's commercial vehicle unit, and a sluggish domestic automobile market, Korean car component manufacturers say they are facing one of the worst crises ever. In addition to their problems at home, the component makers said external factors such as plans announced by the US' Big Three Automakers to cut down production are exacerbating their position.
5. Operations stall at Daewoo Motors plants
Due to cash-strapped sub-contractors being unable to supply key production components, operations at Daewoo Motors' Kunsan and Bupyong auto plants have been suspended. Korea Delphi, which had supplied components for air conditioners for Daewoo's cars, now wants to supply against cash payments only. Daewoo Motors notes that the 1.4 trillion won it received from creditor-banks can hardly fill demand for cash needed for the operation of its plants on a sustained basis.
6. Daewoo to launch Magnus in Taiwan
Daewoo Motors says that it will launch the assembly and sale of its Magnus passenger cars in Taiwan in cooperation with Formosa Automobile Co. The Taiwanese auto firm installed an auto assembly plant after signing an agreement with Daewoo Motors in October 1998.
7. Daewoo Motors trade union opposes layoff plan
Daewoo Motors' trade unit says it is strongly opposed to the management's plan to lay off 6,850 workers, contending that the plan is prompted by the need to facilitate its selloff of Daewoo Motors to General Motors of the United States. The trade union also insisted that a rotating leave without pay system is more preferable than outright massive layoff of workers.
8. Prospect for Daewoo Motors' selloff beclouded
A recent report that Daewoo Motors and its trade union signed an agreement under which all of its local plants are to be sold off en bloc is further clouding selloff of the ailing automaker. GM is known to have opted for the purchase of only Daewoo's plant in Kusan which is equipped with automated production facilities. Perhaps influenced by the reported bilateral agreement between Daewoo management and its trade union, GM has announced that its plan to take over Daewoo Motors will be indefinitely put off.
9. GM's downsizing seen hindering talks with Daewoo
Daewoo Motor's self-rescue measures centering on massive layouts and output cuts are gradually taking shape. But its long-term prospect remains clouded in the face of General Motors' downsizing plan, analysts say. GM, the sole negotiating party for possible takeover of Daewoo Motors, is reportedly planning to make a grave announcement, possibly concerning its worldwide output cuts and falling sales, according to wireless news reports. Its announcement may also contain drastic cost cutting measures, adversely affecting its takeover bid for Daewoo Motors.
10. Ssangyong Motors moving to sever ties with Daewoo
Ssangyong Motors, a sports utility vehicle unit of Daewoo Motors group, says it has suspended vehicle supplies to sister sales company Daewoo Motors Sales, signaling its intent to gain independence from the parent group. Ssangyong also announced plans to set up a nationwide network of its dealerships. The surprise move, coming amidst speculations that Ssangyong and Daewoo Motors commercial vehicle divisions will be separated from General Motors' purchase list, is seen as part of efforts to stand alone. But industry watchers are skeptical of Ssangyong's chance of independent survival, citing its huge debtload of over 2.9 trillion won, and its annual sales or a mere 100,000 units.
11. Court-receivership approved for Daewoo Motors
Daewoo Motors' application for court-receivership was approved by Inchon district court on December 21, thereby paving the way for the normalization of bankrupt Daewoo Motors and its sale to General Motors. The court noted that the ruling only meant starting due diligence to see if the company is viable, saying that the final ruling will be made six months later. The court-receivership will be finalized only after the creditors and other interested parties recognize the company's self-rehabilitation plans as reasonable through further screening for two to four months.
RENAULT - SAMSUNG
1. Listing of 2 life insurance firms' shares delayed
The government recently announced that the listing of the shares of two life insurance firms - Samsung and Kyobo - will not be allowed in the year 2000, due to unfavorable conditions of the stock exchange, and this unexpected move is likely to spark a heated debate between Samsung Motors and its creditors. Samsung Motors planned to sharply reduce its liabilities once the shares of Samsung Life Insurance are listed on the exchange.
2. Samsung group refuses to clear debts of Samsung Motor
Influenced by the government's latest decision to withhold listing of the shares of Samsung Life Insurance, the Samsung group says it will no longer be held responsible for the liabilities of Samsung Motors now that the government withdrew its policy of listing the shares of Samsung Life Insurance on the stock exchange. In view of the latest developments, the creditors' banks of Samsung Motors are now expected to sue Samsung group to settle the legal dispute with the group.
3. Renault's SM5 named worst car produced in 2000
A leading consumer group has named Renault Samsung Motor's only passenger car model, SM5, the worst car produced in the year 2000. A total of 74,754 subscribers to 27 Internet sales sites, polled by the Korea Automobile Internet Business Network Federation (KAINEF) named the SM5 model as the worst car in terms of quality, performance and price.
4. Creditors of Samsung Motors to take legal action against Samsung Motors
The creditors of Samsung Motors on December 7, 2000 decided to take legal action against Samsung Motors when and if it continues to refuse to pay overdue interest on Samsung's 2.45 trillion won debt. In addition, the creditors will exercise their right to dispose of 3.5 million shares in Samsung Life Insurance Co. which Samsung group chairman Lee Kun-hee donated in July 2000 as part of the group's efforts to repay Samsung Motors' debts.
5. Samsung Motors' creditors angered by Samsung's refusal to pay back debt
The Samsung Group on December 12 refused to pay back about two-thirds of the 2.45 trillion won debt left behind by the failed Samsung Motors. Angered by the unexpected move, Samsung's creditors immediately threatened to take legal action against the group and its chairman Lee Kun-hee. They asserted that they might even consider seizing some of Lee's wealth to redeem their credits, saying that they had promised to fully repay the 2.45 trillion debts owed to Hanvit Bank and five other creditors by the end of 2000. As part of the repayment efforts, the Samsung group chairman Lee donated 3.5 million shares of unlisted Samsung Life Insurance, noting that the shares are worth 700,000 won apiece.
6. Renault Samsung struggling to get off ground
Informed sources say that Renault Samsung Motors has decided to cut its output target for December last year by 2,000 to 3,500 units, due to shrinking domestic sales. Renault Samsung Motors was launched on September 1 last year as a result of Renault's takeover of Samsung Motors, produced 3,551 units in the first month and 4,000 units in October. However, it was forced to slash the output by 500 units to 3,500 in November hit by a slowing demand. At this rate, no more than 42,000 units will be produced in the new year, less than half of its 120,000-unit annual target.
7. Samsung Commercial Vehicle declared bankrupt
The Samsung Commercial Vehicle Co., a truck-making unit of the Samsung Group was declared bankrupt on December 17. Shortly after the court ruling, an association of the failed truck maker's parts suppliers held a news conference and vowed that they will not apply parts unless the Samsung group fully repays losses incurred from the bankruptcy estimated at 300 billion won.
1. Toyota received orders for 90 sedans from Korean buyers
Toyota Motor Korea has announced that it has already received orders for 90 sedans from Korean buyers thus far this year. It represents 10 percent of the 900-car target set for this year. Expensive cars ranging in unit prices from 109.5 million to 111 million won accounted for 60 percent of the total ordered thus far.
2. LG Chemical to supply automotive skins to Lear Corp.
LG Chemical says it signed an agreement with Lear Corp. of the United States for the supply of automotive skins needed for the manufacture of instrument and door panels for Ford Motors vehicles. Initially, some US$10 million worth of the item will be supplied a year. Ultimately, Lear plans to supply the item to other automakers, including General Motors and Daimler Chrysler.