Korea Falls to 7th Place in Global Car Production

  • By Shin Eun-jin

    February 11, 2019 13:39

    Korea was overtaken by Mexico last year in terms of car production volume and fell to the No. 7 spot, partly because many Korean carmakers have moved production overseas.

    Korea ceded its nominal ranking among the world's top five automakers to India in 2016 and has now fallen one more notch. It was the only one among the world's top 10 car-producing countries to see an annual output decline for three straight years.

    The Korea Automobile Manufacturers Association said Sunday that Korea's 2018 output stood at 4.03 million vehicles, down 2.1 percent compared to 2017. Over the same period, Mexico's production volume rose one percent to 4.07 million.

    Mexico and India boast high productivity rates compared to wages and are powering on to strengthen their status as key global automobile production bases, which is why Korean carmakers have fled there. Last year, Hyundai's plant in India saw output surpass 700,000 units for the first time, while output at subsidiary Kia's Mexican plant rose 33 percent to 294,600 last year.

    A KAMA staffer attributed Korea's declining ranking to the confrontational relationship between labor and management plus a chronic high labor cost and low efficiency at assembly lines.

    The closure of a GM Korea plant in Gunsan and sluggish automobile sales both at home and abroad also played their part. There are fears that Korea's total vehicle output may decline below 4 million units this year. It peaked at 4.56 million in 2015, only to fall to 4.23 million in 2016 and 4.12 million in 2017.

    As a result, Korea's exports have fallen for six years after reaching 3.17 million in 2012 and dropped to 2.45 million in 2018. Kim Jun-gyu at KAMA, said, "Domestic production facilities are continuously losing competitiveness, while the advantage of export prices is also eroding."

    Meanwhile, China ranked at the top in terms of automobile output last year, although total output declined for the first time in 28 years.

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