korea's automobile & auto parts industry 2009

8/14/2019 Korea's Automobile & Auto Parts Industry 2009

1/19


2/19

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


3/19

Saturated domestic market but still more room

Trends in Automobile Production and Sales

34693699 3840

40863826

(Unit :thousand)


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


4/19


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


5/19


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??


6/19

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 (%)

-10


7/19

Global warming

New energy development


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


8/19


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


9/19


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


10/19

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


11/19

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


12/19


13/19

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


14/19

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


15/19

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


16/19


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


17/19

KD Assemblystage

Developmentstage ofProprietary models

Early stage of mass


Steps of Korean Automotive Industry

production/export

Development stage ofindependent models

Improvement of technologyand open market


18/19

vDevelop innovative auto technologies such astelematics and integrated control systemsincreasing safety and comfort.vSecure source technologies for hybrid and


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.


19/19


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

korea's automobile & auto parts industry 2009

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