‘India may produce more cars than Korea in the near future.’

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Hae-lck Lee, executive director of the Korea Automotive Industry Globalization Foundation, spoke to Jaishankar Jayaramiah on the sidelines of the recent ACMA Automechanika New Delhi 2015 trade fair about the Korean automotive industry and its bilateral trade with India.

How many companies from Korea participated in the expo and what was their main agenda?
This is the first time that we participated in ACMA Automechanika New Delhi. We had as many as 15 companies including our foundation. Almost all are manufacturers and exporters and a few are into trading. They are mainly looking to tap the market for their products in India and export. We have earlier participated at the Auto Expo with 16 companies and are satisfied with the results. I think ACMA Automechanika New Delhi will also satisfy the Korean exhibitors.

How important is Indian market is for you and why?
As you see in the world market, China is very developed as they are producing many cars while European and North American markets are fully matured. But the Indian market is pre-matured and there is much potential for the expansion of the Indian market in the future. Hence Korean auto component makers see India as their potential market. Both India and Brazil are important for us. India comes first but even though Brazil is a small market, it is important for us.

Can you throw light on the Korean vehicle market so as to see its impact in the world market, particularly in connection to India?
In the near future, India may produce more cars than Korea. Our car production in Korea is almost the same every year or a little bit reduced of late because Korean vehicle makers have increased their overseas production including by Hyundai in India.

Korean automakers’ overseas production has increased hugely, touching 4,414,000 units in 2014. The market share of imported cars also has increased to 13.9 percent in 2014 from a meagre 0.4 percent in CY2000 and it is forecasted to be more than 20 percent in 2-3 years. Automobile production in Korea declined from 4,562,000 units in 2012 to 4,521,000 units in 2013.

In overall Korean automobile production, Hyundai ranks first as it accounts for 41.5 percent with 1,876,408 units. It is followed by Kia with 37.8 percent at 1,712,485 units while GM Korea is in third place with 13.9 percent by clocking 629,230 units in sales. Fourth is Renault Samsung with 3.4 percent and sales of 152,138 units. Fifth, sixth and seventh places go to SsangYong, Tata Daewoo and Daewoo Bus with market shares of 3.1 percent (140,259 vehicles), 0.2 percent (11,173 units) and 0.1 percent (3,239 units) respectively.

Can you detail the Korean automotive parts market and its synthesis?
The size of the Korean auto parts market is about $ 68 billion with a growth rate of 10-15 percent after the year 2000. The estimated amount of auto parts exports in 2014 stood at $ 26, 635 million, up from $ 5,925 million in 2004 and our main customers are Asia, North America and European Union. These are also the three main regions from where Korea has been importing parts. Auto parts imports by Korea has increased from $ 2,791 million in 2004 to an estimated $ 4,845 million in 2014.

What is the status of bi-lateral trade between India and Korea in terms of both imports and exports of automotive parts?
The share of Korea’s exports to India recently reduced. The country exported $ 1,552,052 worth of auto parts to India in 2011 and increased this further to $ 1,593,720 in 2012. But the level dropped to $ 1,251,537 in 2013. It is estimated to touch $ 1,064,542 in 2014.

At the same time, its imports from India also fell in 2012 and 2013 but it seems to have recovered in 2014. Auto part imports from India stood at $ 59,556, which declined to $ 49,951 in 2012 and further tumbled to $ 45,061 in 2013. It is estimated to bounce back to touch $ 51,832 in 2014. India shares about 1 percent of Korea’s auto parts import every year. Considering the large market size of India, this is nothing. We expect our exports to India will increase to $ 5 billion in the next 5-7 years.

Can you list out the highlights of the Korean automotive industry witnessed in recent years?
The Korean vehicle giants are investing in technologies for next-generation vehicles like green cars (clean diesel, HEV, PHEV, EV, FCV and Smart Cars, Convergence with electronics, ICT and energy besides in the areas like new material development for lightweight vehicles.

What are the steps taken by the foundation to develop the Korean auto parts industry?
AIN Global Foundation (Korea Automotive Industry Globalization Foundation) was established in December 1999 as a non-profit entity under the Ministry of Trade, Industry & Energy to support Korean small and medium-sized automotive companies. Its main business is organizing Korean automotive industry exhibitions, participating in overseas exhibitions with a Korea pavilion, organizing conferences, seminars and research conclaves. We plan to participate in 10 international expos under the Korea pavilion including ACMA Automechanika New Delhi, Automechanika Dubai and SAE World Congress Detroit. The Korean government has been supporting our participation in some expos.

China is emerging as a major competitor in the global auto components industry. Being another major auto player in Asia, how does Korea view this?
Yes it is notable and a very tough situation. Korean companies may not be able to compete with the Chinese companies but we are concentrating on developing technologies and competing on  quality. Who knows India may also emerge as a major player in the future as already the labour costs have been fast rising in China.

– See more at: http://www.autocarpro.in/interview/-near-future-india-produce-cars-korea-7823#sthash.24PaPKLw.dpuf

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