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FOEX Trade Center Emerging as a Leader in a NewConcept of Trade Methods

May 17, 2023 by Leave a Comment
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Acting as a bridge between state agencies and businesses
Creation of the world’s first semi-public private enterprise
FOEX Trade Center was established in 2017 with the awareness of the need for a company to create a business in the middle ground between state institutions and companies amid intensifying competitions within each group in modern times.
FOEX Trade Center is creating business between government agencies and companies by proposing mutual trade, cultural and sports exchanges, and educational exchanges through import and export consultations — to government agencies, public institutions, and state-owned companies located in China.

Promotion of a new concept trade market in the FTA era
Kim Seung-su, chairman of FOEX Trade Center, invented a new term called Trade Direct Dealing (TDD), a new concept trade method that transforms individual marketing into integrated marketing for small and medium-sized manufacturers.

Chairman Kim explained, “The FOEX Trade Center will gradually expand its business scope into global supply chains as the first step in September this year through the role of the purchasing agency by exhibiting samples such as building materials, furniture, etc. – in collaboration with the city of Fuoshan, China. The Republic of Korea has the largest economic territory in the world with FTAs in place with 59 countries around the world, including Indonesia, which was added from January 2, 2023, and it is thus necessary to attract foreign capital based on this.”

Building of the world’s first offline export/import
network for industrial goods The chairman added, “In the concept of a trade market, the operation of a permanent trade center that enables regular buyer matching and import/ export consultations is important, rather than just
being limited to an event-type trade fair.”
FOEX Trade Center plans to build a global supply chain centered on purchasing agency in Saemangeum by linking up small and medium-sized manufacturing companies in the world with integrated marketing, which is weak in marketing, through utilizing offline platforms such as O2O, B2B, and B2B2C for industrial goods, which are impossible for export and import in B2B in Alibaba and B2B2C in Amazon.

Promotion of MCN Special Economic Zone in
Saemangeum
He suggested the socalled Saemangeum MCN Special Economic Zone for the establishment of a strategic export and import base for young people’s entrepreneurship and employment while first using the term Multi Channel Network (MCN) in the 2022 presidential election pledge proposal, and thus to create a youth digital economic city in Saemangeum.


 
 
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Korea Had 253,058 Trading Firms Last Year – A Record-setting Total Value of Trade

August 22, 2022 by Leave a Comment
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A net increase of 10,030 trading firms last year, compared to the previous year.

The number of newly established trading firms increased by 4.4% last year to reach approx. 67,000 — whilst the number of existing trading firms that exited from their trading business decreased by 1.8%, with only about 57,000 leaving the export sector.


Gyeonggi Province contributed the most to the country’s exports, and semiconductors and electric products were the leading export items.


The Korea Customs Service released its “2021 Statistics on Trading Activities by Companies” on July 27, 2022. The statistics revealed that the total number of trading firms reached a fresh all-time high of 253,058 in 2021, which is a 4.1% increase compared to the previous year — equivalent to an addition of 10,030 new trading companies. The past year has seen the largest total value of trade, which contributed to the record-setting number of trading firms.


Companies performing trading activities are defined as those either engaged in exports or imports. The total number of companies performing trading activities is smaller than the number of exporting companies. Meanwhile, importing companies combined as companies that are both engaged in exports and imports were counted as a single trading company. The Korea Customs Service conducts an annual survey on exporting firms and importing firms to gain a better understanding of the maturity-level of trading firms by grading them as one out of the following three categories: initial operation, entry, or exit. Compiled figures and findings are later published as official statistics.


Last year’s total value of trade hit a record of US$ 1.2268 trillion, which is a 28.1% increase (equivalent to US$ 269.2 billion) compared to the previous year. It is assumed that the post-COVID economic recovery contributed to robust trading activities, which led to an increase in firms engaged in trading activities.


The number of exporting firms shrank by 2.5% (equivalent to 2,500 firms) to 95,640 whereas the number of importing firms increased by 5.3% (equivalent to 10,594 firms) to 212,302. Newly established trading firms that entered the trading business increased by 4.4% (equivalent to 2,844 firms) to 67,236. Companies that exited from their trading business decreased by 1.8% (equivalent to 1,023 firms) to 57,206.


Entry ratio and exit ratio figures were also released. Entry ratio is calculated by dividing the number of newly established trading firms by the total number of this year’s active trading firms; and exit ratio is calculated by dividing the number of trading firms that exited from their trading business by the total number of active trading firms of the previous year. It turned out that entry ratio slightly rose by 0.1%p to 26.6%, while the exit ratio decreased by 1.0%p to 23.5%. Entry ratio and exit ratio figures were also analyzed by item: specifically, the ten most popular items that are handled by a bulk of exporting firms and importing firms. Miscellaneous textile was named as an export item — a core material used to produce COVID masks — that both posted the highest entry ratio and exit ratio for two years in a row at 48.7% and 64.4% respectively.


This is attributable to multiple companies entering and exiting the mask-producing business — a business with a low entry barrier — as the demand for masks skyrocketed during the COVID pandemic. The entry ratio of leather products was the highest among all imported items at 49.5%, whereas miscellaneous textile posted the highest exit ratio among all imported items at 53.8%.


One-year survival rate is an indicator that shows how many firms maintain their trading activities among all firms that established their trading business in 2020. The rate for exporting firms dropped slightly to 46.7% — a 1.2%p decrease compared to last year’s figure. The rate for importing firms saw a slight increase to reach 50.9% — a 0.8%p increase compared to last year’s figure. Five-year survival rates of trading firms that established their business in 2016 were also released. It was revealed that 16.3% of exporting firms and 18.9% of importing firms managed to maintain their business for at least five years.


Another version of one-year survival rate and fiveyear survival rate of trading firms was released, which factors in the types of products these firms handle. Exporting firms that handle minerals posted the highest one-year survival rate at 53.7%; and those handling medical products posted the highest five-year survival rate at 16.9%. Importing firms that specialize in purchasing meat both posted the highest one-year survival rate and the five-year survival rate at 65.3% and 27.1% respectively. Statistics also revealed that the number of Emerging Exporting Companies totalled 4,111 last year — exporting firms that post higher export growth rates compared to the average export growth rate of all firms over the past three years — which is down by 21.7% compared to the last year’s figure.


The number of ‘gazelle companies’ saw a 14.9% decline with 1,315 gazelles currently in the market. Gazelles companies refer to newly established companies among Emerging Exporting Companies that have been engaged in the trading business for less than five years. Statistics on how much each region contributes to exports were also released. It turned out that Gyeonggi Province contributes 21.4% to Korea’s exports, followed by South Chungcheong Province with 16.2%; Ulsan Metropolitan City with 11.5%; Seoul Metropolitan City with 10.6%; and Incheon Metropolitan City with 7.1%. The share taken up by the capital region, including Gyeonggi Province, Seoul and Incheon Metropolitan cities, was 39.1%.


Three key items that contribute to Korea’s exports are electronic products, including semiconductors, which comprise 31.2% of the country’s exports; followed by machinery and computers with 11.8%; and automobiles with 10.4%. Once the share of these three items is combined, it reaches 53.4%, which means that more than half of products that are exported are the nation’s top-three export items. Lastly, the statistics revealed that Leading Companies — trading firms with annual export size exceeding USD 10 million in value — contributed to 91.5% of Korea’s total exports.


 
 
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Many Korean Firms in China Impacted by China’s Harsh Covid Clampdown

August 6, 2022 by Leave a Comment
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The Korea International Trade Association Shanghai Center surveyed 177 Korean companies with business operations in China to assess the extent of damage these companies experienced during the lockdown period in key areas, including Shanghai.


The results were released on June 27 in the form of a report and it revealed that a vast majority of them, comprising 88.1%, were impacted by the measures were impacted by the measures implemented by the Chinese government, which necessitated the provision of support for affected companies to minimize losses.


The report revealed that 88.1% of the respondents experienced “financial losses or negative consequences during the course of performing their business activities.” As many as 97.4% of respondents said sales declined during the first half of this 31.4% of them said their sales plummeted by more than 50% compared to their performance a year ago. A total of 95.5% of respondents forecasted diminishing sales throughout the second half of this year.


During the first half of this year, 69.9% of respondents said they scaled down investments, while 66.7% of respondents said they are hiring fewer people, and that they anticipated the situation will aggravate during the second half of this year with 70.5% of respondents predicting a contraction of investment and 67.3% forecasting a decline in hiring. The report forecasted, “Investment and employment will likely see mounting pressure over time.”


It was also revealed that China’s harsh Covid restrictions are particularly hindering in-person business activities. A total of 16.8% of respondents were affected by movement restrictions; another 16.8% of respondents experienced difficulties in performing sales promotion and marketing activities; while 15.9% of respondents experienced logistics and supply chain disruptions.


When asked about how much their business performance has returned back to normal after restrictions were lifted, 41.5% of respondents said their business has recovered to less than 50% of pre-restriction levels; and a staggering 22.4% of respondents said their business has recovered to less than 30% of pre-restriction levels. This figure showed a big gap between manufacturing companies and non-manufacturing companies. 68.3% of manufacturing companies said their business has recovered to more than 70% of pre-restriction levels, whereas merely 28.3% of non-manufacturing companies responded they managed to reach this level, which indicates more than a double of non-manufacturing businesses are disproportionately affected compared to manufacturing businesses.


The report described, “Considerable time will be needed for non-manufacturing companies to put their business back on track as movements are still restricted and face-to-face customer service is limited despite lifting of lockdown measures in Shanghai.” In response to a question on plans to maintain business in China, the survey revealed 55.3% of respondents have plans to scale down, suspend, pull out business operations in China or relocate their business elsewhere. Only 35.9% of respondents said they intend to adhere to their original business plan and only a fraction of respondents – 7.3% – said they plan to expand business operations in China. The report also discovered Korean companies with business operations in China expect the following from the Chinese government: a) the predictability of the Chinese government’s response to the Covid pandemic, b) distribution of financial subsidies, c) tax deductions and d) discounts on rent.


Seon-young Shin, the Head of the Korea International Trade Association Beijing Center stressed, “The Korean government and relevant institutions should notify the Chinese government of the extent of damage Korean companies are experiencing and insist on the necessity of providing assistance to compensate for the loss in order to boost mutual economic cooperation.” The Head also added, “It will be a smart move collaborate with other foreign companies in China in making this request as a vast majority of foreign companies in China are experiencing similar difficulties and suffering losses our companies are experiencing.”


 
 
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Korean Companies’ Risk of Global Supply-Chain Disruptions

July 17, 2022 by Leave a Comment
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Eight in ten companies are exposed to supply-chain risk

In a situation where at least eight in ten Korean exporting companies are currently exposed to the risks of global supply chain disruptions, a recently published report highlighted the importance of the government’s role in introducing more robust policies to support affected companies. It also stressed the need for companies to devise strategies to build up resilience to deal with supply chain disruptions.
The Korea International Trade Association (KITA) recently released a report titled “The global supply-chain crisis and Korean companies’ response,” which includes a survey result compiled by collecting relevant information from 1,094 Korean exporting companies.


According to the survey, 85.5% of respondents are experiencing problems stemming from supply chain disruptions. Among those experiencing problems, 35.6% pinpointed logistical disruptions, including shipping delays, and skyrocketing shipping costs as the biggest type of risk — followed by rising raw material prices (27.8%), and disruptions triggered by lockdown measures in certain regions (16.9%).
Supply chain disruptions have been a chronic issue with the prolonged Covid pandemic and the war between Russia and Ukraine. The report revealed that companies are devising ways to minimize the knock-on effects of supply chain disruptions. A total of 35.9% of respondents said they are securing alternative supply sources of key items, while 17.8% of respondents said they are building up safety stocks.
However, it was revealed that as many as a quarter of companies are inadequately prepared to respond to the ongoing disruptions, with 12.4% of respondents saying they do not have any strategies in place, and 15.3% saying that they are temporarily suspending or winding down production.
As 39.4% of affected companies identified addressing logistical challenges as the most urgently needed support required from the government, this clearly indicated that what is critically needed is securing freight space on container ships in order to resolve delays in logistics, and the provision of shipping cost subsidies. Aside from addressing logistical challenges, 20.8% of affected companies stressed the need to introduce a supply-chain early warning system, which will allow them to pre-emptively manage and respond to such risks.
Ga-hyeon Park, the Head Researcher at KITA, recently noted, “The ongoing supply chain risk is not only a complicated issue involving a wide array of issues, including the international situation, resource nationalism and climate change, but also became an issue exerting a greater influence on industries.”
The researcher also advised, “The government should focus on resolving logistical problems to overcome the risks accompanied by supply chain disruptions and support companies to build up resilience to deal with disruptions, along with its effort to strengthen year-round monitoring on potential abnormalities, which will help companies to pre-emptively respond to surfacing risks.”


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Trade of Goods between Korea and USA Soars to 169.1 Billion Dollars in 2021

June 15, 2022 by Leave a Comment
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Marking the 10th anniversary of the signing of the FTA between the two nations

This year marks the 10th anniversary of the signing of the Korea-U.S. FTA. Trade of Goods agreement in 2011 before the ratification of the bilateral FTA, which stood at US$100.8 billion, and then soared to US$169.1 billion in 2021. This shows a 67.8% increase in trade within a decade.
For the United States, Korea accounted for 9.3% of trade of goods in 2011 before the ratification of the Korea-U.S. FTA. This figure rose to 13.4% in 2021, making Korea the second-largest trading partner for the Unites States. Korea’s exports to the United States were led by automobiles, automobile parts, petroleum products, secondary cells, refrigerators and synthetic resins, resulting in US$11.6 billion worth of trade surplus for Korea before the ratification of the bilateral FTA, increasing to US$ 22.7 billion in 2021.

Korea attracts the largest size of foreign direct investment (FDI) from the United States, and at the same time, the United States is the largest investment destination for Korean companies. After the ratification of the bilateral FTA, 22.3% of FDI to Korea came from the United States and a whopping 25.2% of Korea overseas investment went to the United States. Korea’s investments in the United States dramatically increased with a bulk of investment directed to the battery, semiconductor and e-vehicle sectors, which contributed to expanding production facilities in the United States and job creation. This also proved to be an opportunity for Korea, as Korean enterprises were able to expand their markets.
The Korea-U.S. FTA as a main contributor to strengthening cooperation in the supply- chain sector between the two countries deserves to be stressed.
Taking the semiconductor industry as an example, the two countries were able to establish a strong valuechain based on each other’s respective strengths. The United States, with its excellence in semiconductor designing on top of a foundation of a stable source of investment, and Korea, with its strengths in the manufacturing sector, established a strong value chain. A similar example can be witnessed in the battery industry sector.

Korean battery production companies and the American automobile companies are engaged in joint investments. This resulted in establishing mutually beneficial cooperative relations between Korea and the United States. It enabled Korean companies to gain a competitive edge compared to other rival countries by securing large-scale clients in advance and allowed American automobile companies to secure a stable source of battery supply.
Aside from these examples, bilateral cooperation based on the contract manufacturing organization (CMO) of medicine and medical supplies amid the Covid pandemic developed into a vaccine alliance, which is seen as another example of solidifying the supply chain.
The report released by the Korea Institute for International Trade (KITA) says, “Based on a stronger cooperative economic partnership with the signing of the Korea-U.S. FTA and expanded trade and investment, Korea rose to become a core partner in terms of supply chain for the United States.” It also added, “A strengthened cooperation in the supply chain sector between Korea and the United States is becoming ever more apparent, especially in core industry sectors, including the semiconductor, battery and pharmaceutical product sectors. The reorganization of supply chain based on mutual trust is gaining greater attention as the two countries experienced a series of supply chain crises triggered by the confrontation between the USA and China and the Covid pandemic.”
Yu-jin Lee, the head researcher at KITA, forecasted, “Future trade agreements will go beyond allowing greater access to each other’s markets and will focus on solidifying alliance from the perspective of economic security.” The researcher also said, “The United States is recently stressing solidarity with its allies and partners as the United States proposes the Indo-Pacific Economic Framework (IPEF). Korea should thus consider ways on how it can utilize the cooperative relationship between Korea and the United States made possible by the FTA between the two countries, and link it with discussions on new regional economic security alliance.” <Source: KITA>

 
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S. Korea’s Trade Surplus with the United States

April 23, 2019 by Leave a Comment

https://korean-machinery.com///inquirySouth Korea’s recent trade surplus with the United States declined amid the surge in oil and gas imports from the United States in order to stave off the issue of Korea’s balance of trade issue with the world’s largest economy.
According to the latest data from the Ministry of Trade, Industry and Energy (MOTIE), the nation’s trade surplus with the United States decreased 22.9 percent to $13.8 billion in 2018 from a year ago, even though the bilateral trade increased 10.3 percent to a record high of $131.6 billion.
In the past year, S. Korea’s exports to the United States reached $72.7 billion, up 6.0 percent, which means that it is faster than the country’s overall annual exports gain of 5.4 percent in the year. For some major export players, shipment of semiconductors jumped 90.6 percent, machinery, up 32.4 percent, while petroleum products rose by 15.7 percent.
Auto exports to the United States, meanwhile, decreased 6.9 percent compared with a year earlier. Exports of mobile devices and rubber products fell by 6.2 percent and 2.2 percent, respectively.
The remaining export items from Korea comprised 2.9 percent of the U.S. market in 2018, remaining at an unchanged level over the past four years.
Korea’s imports from the United States grew by 16.2 percent year-on-year to $58.9 billion last year, mainly because of a sharp jump in energy imports to reduce the strong, consistent pressure from the Trump administration.
Last year, Korea’s imports of U.S crude oil skyrocked 520.1 percent compared with the previous year, natural gas by 179.2 percent, and liquefied petroleum gas by 50.3 percent. The global giant economy’s market share in the nation’s energy market reached 11.0 percent, outdoing Japan to become No. 2 seller.
The service area imports between the two countries rose by 7.2 percent year-on-year to $45.2 billion in 2017, the latest comparative data showed. S. Korea’s service exports in 2017 amounted to $14.9 billion, slightly up from $14.6 billion in 2016. Service imports from the United States expanded 10.3 percent year-on-year to $31.3 billion over the same period.
S. Korea’s service trade deficit with the United States grew in 2017 to reach $16.3 billion, and the deficit has increased 20.6 percent on average from 2012 to 2017.

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Semiconductors, Ships, and Petrochemicals Leading This Year’s Anticipated Three Percent Export Growth

January 25, 2019 by Leave a Comment

https://korean-machinery.com///inquiryFor S. Korea’s exports in 2019, the trend is expected to be sluggish and within a narrow range when compared to last year. This is due to a series of negative factors including trade conflict between the United States and China, a rise in interest rates by the United States, the possibility of financial crises in developing nations, etc., in spite of the gradual growth trend of global economy and a steady global demand on IT.
The nation’s exports and imports in 2019 are expected to rise by 0.3 percent to US$625 billion and 3.7 percent rise to US$557 billion, from last year, respectively, accomplishing US$1 trillion in trade for three years in a row.
By item, exports of semiconductors are expected to reach US$130 billion, the nation’s first among single items, spurred by the demand increase for the servers of data centers and the new market growth including artificial intelligence (AI), Internet of Things (IoT), and self-driving automobiles.
The export increase rate of semiconductors is, however, expected to be much more sluggish, from the thirties last year to five percent this year, caused by the decrease of semiconductors’ unit costs. The export increase rate of ships is predicted to reach 10 percent thanks to the delivery of orders received over the past two years and the base effect. Petrochemicals are anticipated to see a 5.2 percent increase in exports with the help of the increase of export volume by the operation of the domestic new facilities.
Moreover, general machinery and computers are also expected to enjoy increased export volume, due to the investment increase in infrastructure in major nations including China, the United States, and India and the increased demand for SSD used in cloud servers for enterprises and personal PCs, respectively.
For automobiles, exports are expected to reach the record levels of last year, due to the potential financial crises in developing nations affected by the rise in interest rates, in spite of some positive factors including the release of some new car models, the increased demand for some eco-friendly cars and SUVs. The export of display is expected to decrease to 2.2 percent, caused by the decrease in price affected by the oversupply of liquid crystal display (LCD) taking 60 percent of the whole, despite the anticipated upswing in the demand for organic light emitting diode (OLED).
For wireless communication devices and home appliances, the decrease trend of exports is expected to continue. As for steel, the decreased trend is expected to expand, caused by some factors including the restriction of exports by the United States.

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ASEAN, Rising as a Promising Export Market for New Industries, Parts, and Materials

November 27, 2018 by Leave a Comment

https://korean-machinery.com///inquiryASEAN has a population of 640 million, 12.5 times the population of Korea. The GDP growth rate of ASEAN from 2009 to 2017 is almost 5%. The proportion of the Korean exports to the Big 4 markets (China, U.S., EU and Japan) was 50.8% in 2017, decreased from 56.6% of 2007. On the other hand, the proportion of export to ASEAN increased from 10.4% to 16.6%.
ASEAN countries are rising as promising areas for export of new industrial products and parts/materials as they are intensively fostering the high-tech products, and the parts and materials industry of Korea.
In ‘Export Opportunities and Promising Items for ASEAN,’ which was presented by the Institute for International Trade of the Korea International Trade Association, electrical machines and parts in the field of new industry, machines and parts in the field of optical instruments, and parts, copper and aluminum materials, etc. are items expected to be exported to the ASEAN may be significantly more.
Increase of the local market share and stabilization of import demand, especially focusing on electric condensers, telephones, microphones, and printed circuits in the field of electrical equipment, reflectors, liquid crystal devices and laser equipment among optical instruments, and processing/crafting machines, machining centers for metal processing, and cold- formed processing machines in the machinery field are expected to help exports.
This report said that
“while the entire exports of Korea in the last year increased 1.6 times from 2009, the entire exports of ASEAN increased almost 2.3 times. Among them, exports to Vietnam, Indonesia, Myanmar (VIM), and Philippines (VIP) which have strong growth potentials increased 4.2 times and 3.8 times, respectively.”
It also added that “looking at it by item, exports of the new industry, including next-generation semiconductors, displays, high-tech new materials, etc., to ASEAN, VIM and VIP increased 3 times, 15 times, and 6.4 times, respectively. Korean companies evaluated Vietnam and Indonesia most highly in terms of export potential and investment advancement in the survey of the Korea International Trade Association.”
Jung, Gwi-il, a researcher of the Trend Analysis Center of the Korea International Trade Association emphasized that “the major countries of ASEAN have huge potential for the population and economic growth rate and are expanding political support for the industry of high-tech and parts and materials. Korean companies should realize ASEAN as a promising market for export of higher value-added items and accordingly, aggressively attack their markets based on the new industry and the field of parts and materials.”

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Production and Exports of Car

October 25, 2018 by Leave a Comment

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Increased by 8.1% and 2.1%, respectively in August, compared with the same period of the previous year

 

Production, export and domestic sales of South Korea’s finished vehicles all increased, together with export of auto parts.
According to ‘On Domestic Auto Industry of August’ issued by the Ministry of Trade, Industry and Energy, production, export and domestic sales of the finished vehicles increased by 8.1%, 2.1% and 5.0% respectively compared with the same period of the previous year, and export of car parts also increased by 0.5%.
Major finished vehicle companies produced 296,471 vehicles, increased by 8.1% compared with the same period of the previous year, due to early pay settlement, recovery of domestic sales and export, etc.
In addition, exports recorded 174,869 vehicles, increased by 2.1% compared with the same period of the previous year, due to full-scale export expansion of new sports utility vehicles (SUVs) and increase of exports to the Middle East and the European region. In terms of the amount, exports recorded US$28.5 billion, an increased of 0.5%.


Domestic sales of vehicles turned up to be 146,086 units, increased by 5.0% compared with the same period of the previous year, due to implementation of the individual consumption tax reduction to passenger cars and new SUVs (Carnival and Santa Fe). Related to this, sales of domestic cars and imported cars increased by 4.1% to 125,289 units and by 11.2% to 20,797 units respectively.
Especially, in the case of eco-friendly cars, domestic sales of electric cars increased drastically, amounting to 8,640 units, an increase of 9.5% compared with the same period of the previous year. Among them, the hybrid cars and electric vehicles accounted for 6,572 units (up 3.6%) and 1,971 units (up 31.5%), respectively.
The domestic sales volume of major electric cars last month comprised 648 units of ‘Kona EV,’ 399 units of ‘Soul EV,’ and 631 units of ‘Volt EV.’
Exports of these cars also increased by 25.7% compared with the same period of the previous year, recording 15,926 units. Among them, the numbers of hybrid cars and electric cars sold were 11,650 units (up 17.3%) and 2,731 units (up 153.3%), respectively, thanks to the good performance of Hyundai Motor’s Ionic hybrid and electric car models.
Meanwhile, export of auto parts last month recorded US$1.87 billion, an increase of 0.5% compared with the same period of the previous year, due to expansion of exports to North America and the European region despite decrease of exports to Asia and Europe.

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The Production and Export of Automobiles on the Decline are Decreased

July 26, 2018 by Leave a Comment

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Export of eco-friendly vehicles and SUV with high unit prices increased.

 

South Korea’s domestic automobile industry has diminished its decline since February, although both production and exports have decreased in terms of vehicle numbers.
In May, exports of both automobiles (1.9%) and auto parts (14.7%) increased YoY in terms of the amount due to export increase of eco-friendly cars and SUVs with high unit prices and export increase of auto parts to the US and China.
Only 354,595 cars were produced in May, 1.3% less annually, due to discontinued production of some models, decrease of domestic sales and exports of domestic cars. Sales of domestic cars decreased slightly but, due to increase of imported car sales, total domestic sales recorded 157,771 units, increased by 1.3% YoY.
During this period, automobile production was only 354,595 units, decreased by 1.3% YoY, due to overseas inventory adjustments, discontinued production of some models, and decrease of domestic sales and exports of domestic cars. The models that were discontinued in February were Cruze and Orlando.
Hyundai Motor’s production dropped by 4.3% YoY due to production adjustments caused by sluggish exports of some models despite the increase in domestic sales, mainly in SUVs (Santa Fe, Kona).
Kia Motor’s production increased by 7.0% YoY on the strength of the effect from new cars such as K3, K9, and Carnival (including partial changes). In case of GM Korea, production decreased by 14.4% YoY due to discontinued production of Gunsan Factory coupled with slump of domestic sales and exports.
Ssangyong’s production jumped by 9.4% YoY thanks to the domestic sales effect of the new car Rexton Sports(pickup) released early this year. On the other hand, Renault Samsung’s production fell by 4.9% YoY due to sluggish domestic demand and exports of SM6.

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