Joo warns car industry of big changes, urges R&D

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Joo warns car industry of big changes, urges R&D


Top managers of Korean automotive companies including Hyundai Motor President Chung Jin-haeng, sitting at far left, face officials from the Ministry of Trade, Industry and Energy including Minister Joo Hyung-hwan, second from right, during a meeting held at the Conrad Hotel in Yeouido on Wednesday. [NEWSIS]

Minister of Trade, Industry and Energy Joo Hyung-hwan urged Korean automakers to focus on new technologies for vehicles and said the government will give benefits such as tax cuts to encourage them.

Joo met with heads of key Korean automakers and industry insiders Wednesday to emphasize that the paradigm of the car industry is changing rapidly and that Korea shouldn’t fall behind new technologies on vehicles developed by Tesla, Google and Apple.

“Korea’s key industries such as shipping and shipbuilding are having rough times due to the ongoing corporate restructuring and the automobile industry also is facing new challenges because it has to prepare for the new paradigm,” said Joo. “The automobile industry accounts for 12 percent of employment in the manufacturing sector and 14 percent of total exports from Korea. The industry is facing new competition in electric cars and the government will do its best to support Korean automakers to be competitive in the global market.”

Joo said the government plans to expand tax benefits for research and development in the automobile sector and asked automakers to expand their investments.

“The market for electric vehicles is growing rapidly and Tesla is currently leading the market, while China is growing rapidly,” said Joo. “Like it or not, we will have to compete with them in the near future and we should use our leading technologies in vehicles and semiconductors to compete with them.”

Joo pointed to signs that show the automobile industry in general is slowing. According to the Trade Ministry, automobile production fell 5.4 percent year-on-year in the first half of this year and exports dropped 13.3 percent year-on-year during the same period.

Joo expressed concerns about strikes at some automakers in the country since they might have negative impacts on Korea’s exports in general. In fact, Korea’s exports have fallen for 19 consecutive months.

According to the Trade Ministry, strikes by Hyundai Motor, Kia Motors and General Motors Korea will drag down production by 28,000 units and exports by $266 million this month alone.

Heads of key automakers including Hyundai Motor President Chung Jin-haeng, Kia Motors CEO Park Han-woo, GM Korea CEO James Kim, attended the meeting and revealed some of their plans.

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