Germany’s auto and parts industry look to expand in Korea

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Germany’s auto and parts industry look to expand in Korea


German Association of the Automotive Industry’s managing director, Klaus Braunig, left, speaks at a press conference at the 2013 Seoul Motor Show at Kintex in Goyang, Gyeonggi, Thursday. Provided by the Korean-German Chamber of Commerce and Industry

The German automotive industry wants to boost cooperation with Korea’s industry and removing nontariff barriers is necessary, according to Klaus Braunig, managing director of the German Association of the Automotive Industry (VDA).

Before the opening of 2013 Seoul Motor Show, which ends its 10-day run Sunday, Braunig held a press conference to introduce German auto parts makers at the German pavilion in the show.

This is the third time that the VDA has been participating in the event to promote trade between Germany and Korea. More than 600 companies in the German automotive industry are represented by the VDA.

Braunig said that German carmakers are doing a good job in Korea, and he thinks German companies can further expand their presence in the market.

Since 2009, German carmakers have more than doubled their market share in Korea. In 2009, their market share was 2.7 percent and last year it reached 6.9 percent.

In the imported car market, German-made cars are dominant. According to data from the Korea Automobile Importers and Distributors Association, in the first two months of this year, seven out of 10 foreign cars sold in Korea are German.

“Car enthusiasts in Korea obviously value the outstanding quality, the superior design, the great safety, the comfort and the joy of driving, which German premium cars stand for,” Braunig said. “Korea is thus quite clearly a very important premium market for our automotive industry.”

Braunig said that there is some similarity between Korea and Germany’s automotive industries so there is common ground for both nations. Just like Germany’s industry, he said, Koreans have consistently strived to succeed overseas.

“Both are evidence that internationalization keeps particular jobs in the home country and has even created new jobs,” he said. “Our suppliers are watching the ramp-up of Korean passenger car production in the European Union very closely.”

However, to further pursuing sustainable growth, Braunig suggested that both countries need to work for the removal of nontariff barriers (NTB) following the start of the Korea-EU free trade agreement two years ago.

He said both sides should have unified standards in technical regulations. For instance, requirements for the adaptive front-lighting systems, replacement wheels for passenger cars, and CO2 output are different in Korea and Germany.

“For us, it was always important during the negotiations on the FTA to examine not only import duties but also nontariff barriers and to reduce them on a permanent basis,” Braunig said. “In this context, we are backing constructive dialogue and the instruments that the FTA has made available to us, such as bilateral consultations and arbitration procedures.”

Braunig said it is too early to judge the impact of the Korea-EU FTA, although he gave an impression that it has been really beneficial to Korean auto parts suppliers.

Last year alone, Korean suppliers increased their exports to Germany by 23 percent. But according to Braunig, German suppliers suffered a fall of 13 percent in their sales to Korea.

He said potential still exists for both sides and the FTA should help intensify good relations between Korea and Germany.

Braunig said that German companies have not only invested heavily in expanding their sales and marketing activities in Korea, but also worked hard to create jobs here, emphasizing that they are trying to make a contribution to the development of the Korean auto industry.

“We see this as a win-win situation,” he said. “We will continue to back fair market access for both sides and the removal of existing obstacles.”

Braunig said the German pavilion at the motor show will open doors for small- and medium-sized suppliers of both countries. Although competition is growing, German companies accept the challenge.

According to VDA survey, since 2001, the proportion of Asian sales for German suppliers has grown from around 2 percent to almost 10 percent. He expects that number will grow in the future.

“The Korean automotive industry finds extremely competent and innovative development partners,” Braunig said. “The worldwide trend toward more compact vehicles is definitely one that can benefit the German suppliers here in Korea.”

By Joo Kyung-don []
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