korea's automobile & auto parts industry 2009
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Automobile Industry Status
Manufacturers in Korea ( 2008 )
No. ofEmployees Production Exports Turnover(Bil.Won)
56,020 1,6741,099 32,190
17,198 12,311
915703
7,154 2,49581 43
7,563 3,70518895
32
,7201,055 739
16,382
Thousand Cars Billion KRW
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Saturated domestic market but still more room
Trends in Automobile Production and Sales
34693699 3840
40863826
(Unit :thousand)
Automobile Industry Status
Production and Sales Volume
Production Exports Domestic Sales
2946
1676 1501 16221815
2380 25862648 2847 2683
1430 1451 1510 1318
1094 11431164 1219 1154
2000 2001 2002 2003 2004 2005 2006 2007 2008
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Automobile Industry Status
Where Production Facilities
Inchon
500,000 Pyongtaek
220,000
Asan
City
Annual production capacity Sohari350,000
Daegu
40 suppliers
Hwasung
600,000
,
Gunsan
300,000
Changwon
Engines
Busan
250,000
Ulsan
1,500,000
Jeonju
125,000
Gwangju
400,000
Changwon
240,000
Seosan
150,000
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Automobile Industry Status
Global Presence & Changes
Global Presence
Acquired controlling share (37.3%)of Kia Motors (Nov. 1998)
Strategic Alliance
51% Merged w/Daewoo Motor
80% Merged w/
Samsung Motors
Shareacquisition
WHO??
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Automobile Industry Prospects
Shares of the Global Players
Restructuring in the Global Auto Industry-Toyota now No.1 in the world- Old days for BIG 3 - GM Bankrupt/Chrysler merged to FIAT- Rise of Korean cars in the U.S. Market
20.3% 13.1%
1 .1% 10. %
4.3% 5.8%
10. % 1 . %
2000 2007 2000 2007
3.0
4.8
2.83.1
-12.2
-6.0
-3.1
-5 0 5
Hyundai
Nissan
HondaToyota
DaimlerChrysler
Ford
GM
Source: KARI
Note: Y-o-Y % Change
Source: FOURIN
Change in Sales in the U.S. Market in 2007 (%)
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Global warming
New energy development
Automobile Industry Prospects
New Waves in the Auto Industry
Paradigm Change
Environment More Competition
for highly efficient
& environmentally
More
Safety restrictions
CAFE(Fuel Efficiency)
Emission control
Customer needs for convenience
More electronic devices
Telematics
Multimedia
Internet
New Trend
Regulation
friendly car
New energy carHybridFuel cell car
Application of
Intelligent Systems
Technology
oopera onwith
competitiveparts
supplier
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Automobile Industry Prospects
SWOT Analysis of Korean Auto Industry
Brand Awareness
Labor union issues
Immature Parts & raw material industry
Price Competitiveness:
- Highly-skilled workers,
- low-cost parts & materials
Diversified export market
Aggressive Marketing
Strengths Weaknesses
Opportunities Threats
Saturated domestic market
High dependency on overseas market
Technology gap to advanced countries
Successful launches on-site production
Geographical proximity to Chinas markets
Potential market of ASEAN
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Automobile Industry Prospects
Major Factors Affecting Market
Positive Negative
Outlook for 2009
Economic depressionDomestic - - Potential replacement demand
Export - Demand in emerging market
- Improved quality & performance
Strong competition by makers
(Price cut, Low interest rate Financing)
Weakened price competitiveness
( weak Korean currency )
World Financial crisis
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Parts Industry
General Overviews
Decrease in OEM Share & Increase in Export in Total Sales
Year Hyundai Kia GMDAT SsangyongRenault-Samsung
DaewooBus
Tata-Daewoo
Total
2006 366 372 304 220 133 186 196 1,777(902)*
1,775
Number of 1st Tier Suppliers by Auto Maker
Number of actual suppliers/ Number of FDI companies : 170 among 889
9
YearSales Volume
TotalOEM A/Market Exports
2006 37,559 (78%) 2,441 (5%) 8,002 (17%) US$ 48,002
2007 38,641(77%) 2,319(5%) 9,231(18%) US$ 50,191
2008* 28,129(77%) 1,688(5%) 8,036(18%) US$ 37,852*
Total Sales Volume in Korean Auto Parts Industry(Unit: US$ mil.)
* Note : 37.5% $ appreciation *source : KAICA
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Threats of Entry
Large-scale Strong foreign
companies
Rise of China with low price
Parts Industry
Business Climate of Korean Auto Parts Industry
Rivalries
New entrance of
potential suppliers
Different sizes
Suppliers Bargaining Power
Raw material price up
Bigger suppliers bigger power
Buyers Bargaining Power
Increased cooperation
Continuous requests for
cost reduction & quality
Big volume order
Threats by Substitutes
New types of vehicles (HEV)
Technology integration
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Parts Industry Prospects
Growth Factors of Korean Auto Parts Industry
Big Volume of domestic production
Orders from ma or lobal makers
OEM
Positive Factors
Negative Factors
Quality & price competitiveness
Encroac ment y C inese supp iers
Weak Technology
Sourcing from low cost
More cars on the road
Demand to authentic parts
AfterMarket
Increased durability
Less car accidents
Low price generic parts
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Investment opportunities
Competitiveness of the Korean Auto Industry
Koreas Automotive Industry
No. 5 in the world in 2008total production of 3.8 Mil.Units
5.4% share of the globalproduction 11,563Japan1
ProductionCountryRanking
World Automobile Production Ranking
Unit: thousand vehicles
3,220Brazil6
3,826Korea5
6,045Germany4
8,696USA3
9,345China2
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Leading industry with semi conduct
Auto/Semi Conduct (2006)Employment
1.09% /1.07%
Export
9.4% /10.25%
GDP Portion
2.4% /3.8%
R&D fostering environment
Investment Opportunities
Automobile Industry in Korea
Strong Governmentsupport
Company friendly policy
Road Length(Km)52,264(85) 103,019(07)
Road pavement49.8% (85) 77.6%(06)
Globalization Global Parts sourcing
Worldwide marketing
Global R&D
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Investment opportunities
Vision for Future Vehicle
Vision
Big 4 in the worldthrough developing eco-friendly vehicle
Balanced growth both OEM and parts supplier
through developing technology of eco-friendly vehicle
Secure the sustainable growth drive engine for Korea Auto
industry to be the global best
Strategy
Develop and commercialization of system technology ofparts for hybrid and fuel cell vehicle
Global suppliers base of the parts for hybrid and fuel cell
vehicle
Improvement of living condition through wide spread ofeco-friendly vehicle
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KD Assemblystage
Developmentstage ofProprietary models
Early stage of mass
Investment Opportunities
Steps of Korean Automotive Industry
production/export
Development stage ofindependent models
Improvement of technologyand open market
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vDevelop innovative auto technologies such astelematics and integrated control systemsincreasing safety and comfort.vSecure source technologies for hybrid and
Investment Opportunities
Policy Direction for Automobile Industry
Automobile IndustryPolicy Direction
fuel-cell vehicles.vProvide incentives for eco-friendly vehicles.
Parts & material Industry
Policy Direction
vDevelop technologies for imported parts andmaterials.vConstruct business-friendly infrastructure.
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Investment opportunities
Government Initiatives for Development
Create a Made in Korea Premium in the Global Automobile IndustryPlay a Leading Role in Key Industries in the US $30,000 GDP Era
Top 4 in the World by 2015
Vision
Source : Ministry of Commerce, Industry and Energy,
2015 Automotive Industry Policy Direction, 05.11.15
8% (4th)
US$ 37billion US$ 12.4billion
2 12
US$58 billion US$16 billion
Automobile production Domestic Overseas
5.8% (5th)
4,086,308 cars 1,162,000cars
5,200,000 cars 2,400,000 cars
264,000 (2006) 280,000
Global market share
Worlds top 100 autoparts suppliers
Automobile exportsAuto parts exports
No. of new jobs