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

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Third, relatively low commitment to exports. Whereas exports of electronic parts account for 70%, auto parts comprised a mere 18.2%, heavily depending on domestic consumption, compared with Japan’s 47.9% and the United States’ 205.3%. Such a trend resulted from a lack of suppliers with a large-scale global system, unlike the cases in the United States or Japan. Current status of Korean auto parts manufacturers Auto parts manufacturers with more than five employees totaled 3,328 as of the end of 2002. The breakdown is 532 for engine parts, 526 for chassis parts and 2,270 for other parts. Auto parts manufacturers by type of product (2002) Parts No of manufacturers (in KRW billion) Employee Output Value added Engine 532 19,463 3,235 1,330 Chassis 526 23,861 4,975 1,901 Others 2,270 23,861 16,738 5,921 Total 3,328 86,174 24,948 9,152 Korean auto parts industry s subcontract structure Viewing the outsourcing rate, a major index indicating the auto parts industry’s subcontracting structure, auto manufacturers independently produced 37% of major components and parts needed, while the remaining 63% were acquired through the outsourcing. In contrast, parts and material suppliers produced 51% of the orders they received from auto manufacturers, while the remaining 49% were re-ordered by the subcontractors. Reasons for outsourcing to the subcontractors included the lower costs, first of all, and secondly the fact that the volume is too small for in-house production, so outsourcing is considered to be more costefficient.
Korea’s Auto Industry - Today and Tomorrow Offering Investors a Future-Oriented Optimal Investment Environment In-house production versus outsourcing Assembly/Process firm Part/Material suppliers In-house production 37% 51% Outsourcing 63% 49% Source: KIET, Subcontract status in Korean industry 2004 Bidding system in Auto Industry. For traditional technologies or products, both the assembly/process and parts/material industries adopted price competitive bidding, which was offered based on auto manufacturers’ designs. Bidding method Based on auto manufacturers’ designs Price competition-based bidding Based on auto manufacturers’ designs Technology development-based bidding Open price competition bid Others Bidding for existing product Source: KIET, Subcontract status in Korean industry 2004 Assembly/Process Parts/Material 44% 48% 17% 16% 17% 24% 22% 16% For new technology or products, both the assembly/process and parts/material industries adopted price competitive bidding based on auto manufacturers’ designs. Bidding method Based on auto manufacturers’ designs Price competition-based bidding Based on auto manufacturers’ designs Technology development-based bidding Open price competition bidding Others Bidding for new technology products Source: KIET, Subcontract status in Korean industry 2004 Assembly/Process Parts/Material 50% 54% 17% 17% 11% 24% 22% 5% 16 I 17 Korea’s Auto Industry - Today and Tomorrow
Page 2 and 3: Table of Contents Korea’s Auto In
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Page 6 and 7: comprehensively improve the Korean
Page 8 and 9: Sector Energy Environment Advanced
Page 10 and 11: GM Daewoo Auto & Technology Company
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Page 39 and 40: T O T A L S A L E Location Types of
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Korea's Auto Industry - Today and Tomorrow - Invest Korea

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