Automotive industry in South Korea

While its initial operations were merely the assembling of parts imported from foreign companies, South Korea is today among the most advanced automobile-producing countries in the world.

In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signalling its coming of age.

The history of the Korean automotive industry began in August 1955, when Choi Mu-seong, a Korean businessman, and two of his brothers (Choi Hae-seong and Choi Soon-seong), mounted a modified and localized jeep engine on a US military jeep-style car body made with the sheet metal from a junk oil drum can and military junk Jeep parts to manufacture its first car, called the Sibal (car).

While localization of auto parts was the major concern during the 1970s, developing mass production system for the export-oriented industry became the issue during the 1980s.

With this initial success in the export market, the company began in 1989 to produce models, designed in-house and manufactured with its own technology, starting with the Sonata, a medium-sized sedan.

In 1992 its ScoupeTurbo won at the Pikes Peak Hill Climb Rally, and in 1993 its Elantra was selected as the "Best Car of 1993" in Australia.

Hyundai's Accent earned Canadian Best Buy Award in 1995, and its Avante also won the Asia-Pacific Rally that year.

As time caught up with the poor reputation of Hyundai in the United States, sales dropped drastically, and car dealerships started abandoning their franchises.

This effort paid dividends for Hyundai, and in 2004 the company tied with Honda for initial brand quality, second in the industry behind Toyota, in a survey conducted by J.D.

Towards the end of the 20th century, however, the industry began to face tremendous pressures at home, with the domestic market growing at under five percent, and greater competition, both locally and abroad.

With energy waste, air pollution, and traffic congestion becoming more chronic, the Korean government has imposed the heaviest vehicle excise duty on automobiles and gasoline among the major automobile-producing countries.

In response to these pressures, Korean automakers have become more aggressive in terms of pricing and quality, and begun developing larger cars, and broadening their product ranges to meet diverse customer preferences.

This leaves South Korea vulnerable to trade tensions and geopolitical shocks with China and other countries in the region.