Carmakers, gov’t meet as industry struggles

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Carmakers, gov’t meet as industry struggles

In the midst of what seems to be the most troubling period that Korea’s automotive industry has ever faced, government and industry leaders gathered on Monday to discuss the ongoing issues and potential solutions.

Chaired by Baek Woon-kyu, minister of trade, industry and energy, the discussion session included the heads of five domestic carmakers - Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motors and SsangYong Motor - as well as Korea Automobile Manufacturers Association head Kim Yong-geun and executives from auto parts makers.

“Korea’s auto industry is in a crisis. The government and industry should collaborate so the crisis can become an opportunity for a leap forward,” Baek said before the start of the session which took place behind closed doors. “Korea’s auto industry should brace for the emerging fourth industrial revolution focusing on artificial intelligence and internet of things, and secure a competitive edge,” he added.

Hyundai Motor and its smaller affiliate Kia Motors announced that they will provide 250 billion won ($2.21 million) to Korean auto parts makers with operations in China that are struggling as Hyundai and Kia’s sales have dropped in China due to geopolitical tension between Seoul and Beijing.

The fund will be paid in a lump sum to parts makers that need mold components which are expected to at least temporarily raise financial and production flexibility.

Chung Jin-haeng, president of Hyundai Motor and Park Han-woo, president of Kia Motors, participated in the session, which lasted for nearly one and a half hours.

The two auto companies said that despite hardships they intend to hire as many people as last year and focus on securing a strong workforce for research and development. They also said they will expand investment on future car technology.

Kaher Kazem, the newly appointed CEO of GM Korea, also participated in the session and said GM Korea needs to find a way to raise its competitiveness and reduce costs. To do that, Kazem said that the ambiguous regulations on emissions in Korea need to be cleared up.

Kazem also said that General Motors focuses on business in countries that can raise profit and productivity and that Korea is one of those, a statement that seems to be aimed at putting to rest rumors that GM Korea will soon pull out from Korea due to continuous loss.

Renault Samsung Motors CEO Park Dong-hoon said the company will launch more than four electric vehicles by 2022. SsangYong Motor CEO Choi Johng-sik said the company plans to launch its own electric SUV 2019.

The decision against Kia Motors last week in a dispute with its labor union over including regular bonuses in workers’ base payment was a huge concern across Korea’s auto industry.

Kia chief Park Han-woo said he didn’t expect the company to lose the suit and added he is “doing a lot of thinking” about it. When asked by the media if there is a possibility of Kia relocating factories overseas due to increased wages, Park said he “hasn’t yet thought about it.”

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