Korea's Auto Industry - Today and Tomorrow - Invest Korea

Korea’s Auto Industry - Today and Tomorrow
Offering Investors a Future-Oriented Optimal Investment Environment
Some of the features of Korea s auto parts industry
First, its small and medium-centered industrial structure. The parts manufacturers
directly dealing with auto manufacturers totaled 878, with 154,000 employees (as of 2003).
Among them, the manufacturers categorized into large-sized companies (capital of KRW8
billion or more with 300 or more employees) accounted for 7.9% or 69 manufacturers. But the
number of companies with more than 1,001 employees totaled around 30.
Large companies Small & medium Total
Number of firms 69 (7.9%) 809 (92.1%) 878
Total output of parts manufacturers directly dealing with auto manufacturers in 2003 amounted
to KRW26.602 trillion. Average output per manufacturer was KRW29.68 billion. When
detailing it by scale of manufacturer, the small company-group accounted for 1.9% (KRW1.8
billion in an average value), medium companies 48.2% (KRW23.5 billion) and large ones
49.9% (KRW188.5 billion), which clearly indicated large gaps among the companies.
Second, heavy dependence on the parent company. Whereas Toyota, capable of
manufacturing 7 million cars a year, had only 200 parts suppliers in 2003, Hyundai which sold
1.67 million cars, had as many as 355, which means Hyundai whose output reached a mere
one-fourth of Toyota, rather had far more suppliers. Of parts manufacturers, those supplying the
parts to a single manufacturer accounted for 51%, heavily depending on the parent company.
However, as price and quality-centered procurement practices have been taking root, the
hierarchical trend is losing its power.
Number of multi-transaction companies
(Based on Hyundai, Kia, GM Daewoo, SsangYong, R-Samsung, Daewoo Bus)
Number of parent companies to deal with
1 2 3 4 5 6
Total
No of
suppliers
450 217 94 61 34 22 878
% 51.3 24.7 10.7 6.9 3.9 2.5 100
14 I 15 Korea’s Auto Industry - Today and Tomorrow