Car production falls nearly 2%

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Car production falls nearly 2%


Production of vehicles in Korea fell below 4 million units last year, the first time since the global economic meltdown of the late 2000s.

The government blamed labor strikes as a primary cause.

According to the Ministry of Trade, Industry and Energy on Thursday, Korean automotive companies - Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motors and SsangYong Motor - manufactured 3.95 million vehicles in 2019, a 1.9 percent drop from the previous year.

The last time automotive production fell below 4 million was in 2009, when 3.51 million vehicles were manufactured.

In December only 337,504 vehicles were made, a 5.4 percent drop compared to the same period in 2018.

The government said strikes at GM Korea and Renault Samsung Motors accounted for 92.6 percent of the decline.

GM Korea saw production nosedive from 107,000 units in 2018 to 70,000 last year, a 34.5 percent decline, while Renault Samsung Motors’ production fell 7.9 percent from 445,000 to 410,000 during the same period.

“Overall production fell compared to the previous year as Renault Samsung Motors orders for the Nissan Rogue were slashed and GM Korea’s export to Europe ended while strikes were ongoing,” said a ministry official.

GM Korea workers were at odds with the company’s management over wage negotiations leading up to a partial and full strike for more than a month in August.

The Korean operation of General Motors has struggled, and the U.S. parent company agreed not to pull out of the Korean market while shutting its Gunsan plant in 2018.

Renault Samsung Motors has had its own friction between labor and management. Between October 2018 and last May, workers held strikes that resulted in a loss of 312 hours of production.

The strikes are continuing.

Kia Motors also saw partial strikes last month over wages.

But production wasn’t the only problem in 2019 for the auto industry. Both domestic sales and exports fell as well.

Last year, 1.78 million vehicles were sold in the domestic market, which was a 1.8 percent decline year-on-year.

The decline in sales was not limited to Korean automakers, and imported brands suffered particularly badly. Koreans started to boycott Japanese cars after the government in Tokyo imposed trade restrictions last summer that were seen as retaliation for Korean Supreme Court rulings in 2018 against Japanese companies over the issue of forced labor during World War II.

Korean automakers last year sold 1.52 million vehicles, a 1 percent drop. Imported vehicles, which had been enjoying rapid growth, dropped 6.4 percent to 263,000 units.

In the first six months of last year, five Japanese brands saw a 10.3 percent increase in sales. In the second half, sales dropped 45 percent.

Overall, Japanese car sales in the domestic market shrunk 19 percent year-on-year to 36,661 vehicles.

Exports by volume shrunk as well.

Last year, exports of cars manufactured in Korea declined 1.9 percent to 2.4 million vehicles.

Domestic sales and exports of environment-friendly vehicles, however, saw record-breaking sales last year.

Domestic sales of EVs and hybrids as well as hydrogen-fueled vehicles grew 13.5 percent year-on-year to 140,311 vehicles, while exports surged 31.7 percent to 258,669 units.

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