The country`s automotive industry can trace its roots back to 1944 when the Kyungsung Industrial Co., which went onto become Kia Motors Corp., was founded.

Over the following decades, Korea became the world`s fifth-largest manufacturer of automobiles with five original equipment manufacturers that are headed by Hyundai Kia Automotive Group, the world`s fifth-largest automaker.

The industry also developed into an irreplaceable part of the local economy, responsible for approximately 11 percent of the local manufacturing industry`s annual output and 10 percent of its exports.

However, the local industry`s history has not all been smooth sailing.

Due to difficulties amplified during the 1997-98 Asian financial crisis, Kia Motor Corp. was incorporated into the Hyundai Group and the controlling shares of Samsung Group`s Samsung Motors Co. were bought by the French automaker Renault S.A.

Daewoo Motors was acquired by U.S.-based General Motors Corp. and control of the oft-troubled Ssangyong Motor Co. ended up in the hands of the Chinese automaker Shanghai Automotive Industry Corp.

Ssangyong, which once again entered court receivership in February, is facing an uncertain future with its revival plans having been rejected by the company`s foreign creditors.

Although Korea`s auto industry is not without its troubles, the local automotive industry has weathered the latest global financial crisis relatively well.



The world`s automotive market remains sluggish, and some of the world`s largest carmakers have been sorely tested to survive.

During the early stages of the latest economic crisis, local business leaders repeated the phrase "finding opportunity in crisis," like a mantra and for some Korean carmakers the global economic turmoil did indeed present unexpected opportunities.

For the first nine months of the year, Hyundai Motor Co.`s global market share came in at 5.2 percent while that of its sister carmaker Kia was recorded at 2.6 percent, pushing up the combined market share of the two firms to the record high of 7.8 percent.

Last year, Hyundai`s global market share was recorded at 4.4 percent and Kia`s at 2.1 percent.

In the United States, Hyundai and Kia have been expanding their market presence by filling the gap left by the competition.

According to the U.S. automotive industry publication Ward`s Auto, the combined sales of the group`s two carmakers rose 47.4 percent from a year ago to come in at 53,495 units.

Separately, Hyundai`s sales rose at a slightly higher rate of 48.9 percent while Kia`s October sales increased by 45.3 percent from a year earlier.

The increase rates recorded by the two carmakers are the largest among light vehicle brands marketed in the United States, and nearly 14 times higher than the average increase rate for foreign brands.

"Our aggressive marketing strategies such as the Hyundai Assurance program appear to have helped in achieving higher growth rates."

For the first 10 months of the year, Hyundai`s U.S. sales have risen by 4.1 percent from last year, while Kia has seen a 7.2 percent rise.

The two firms have also reaped significant results in China, the world`s fastest growing automotive market.

Hyundai`s January to October sales in China are already 56.4 percent higher than the figure for all of last year, while Kia has exceeded 2008 sales by about 27 percent during the first 10 months of the year.

"We have a competitive small car lineup, and this worked to our favor as even the motorists in markets with traditional preferences for larger cars began to pay more attention to smaller, more economic vehicles," a Hyundai Kia Automotive Group official said.

"In addition, strategic vehicles designed to appeal to consumers in specific markets such as the Chinese version of the Avante helped us make headway in fast growing markets."

Even for smaller carmakers, things are looking up.

Although unfortunate decisions about currency hedging had caused GM Daewoo to be strapped for cash for a time, the company has secured sufficient liquidity for about 18 months with its parent firm GM injecting $400 million into its Korean arm in October.

Aided by the popularity of the New SM3 compact sedan, Renault Samsung Motors Co.`s sales for the first 10 months of the year have been pushed up 19.6 percent compared to the same period last year.

Although Renault Samsung`s export figure for the period remains lower than last year, the gap between last year`s and this year`s figures is slowly narrowing.

The troubled Ssangyong sold 34,580 units during the first 10 months of the year, despite the 77-day sit in strike. Sales surpassed both the 27,000 unit sales indicated by the accounting firm PricewaterhouseCoopers as the number the company would require to keep its continuation value above the liquidation value and the self-set target of 32,000 units.

Locally produced vehicles have also been gaining increasing recognition in terms of reliability and safety in overseas markets. Hyundai`s sports sedan Genesis won the North American Car of the Year award this year - the first time for a Korean car -while Kia`s cee`d won the car of the year award in Europe in 2007.

Vehicles manufactured by local carmakers including the Kia Soul, GM Daewoo Auto and Technology Co.`s Lacetti Premiere which is known as the Chevrolet Cruz received top safety ratings in various markets including the United States, Australia and Europe.

In addition to improving the quality of conventional vehicles, local carmakers have also been spurring on their efforts to develop eco-friendly vehicles.

In July, Hyundai Kia Automotive Group`s two carmakers launched hybrid electric vehicles introducing the first locally produced hybrid vehicles to the market.

The vehicles, based on Hyundai`s Avante and Kia`s Forte, are powered by a combination of liquefied petroleum gas engine and electric motors.

Although the vehicles are designed only for the local market, Hyundai has a gasoline-electric hybrid vehicle in the works that will be sold both here and in overseas markets.

In addition to entering the existing market for electric hybrid vehicles, the two carmakers have also been spurring on efforts to develop electric cars and hydrogen-powered vehicles.

(cheesuk@heraldm.com)



By Choi He-suk