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Background Behind Rapid Progress in the Koraen Automotive Industry

Author Oh Ku-chang Cho Chul Date 1996.12.01 Page 0
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Abstract Korea ranked as the fifth largest automotive producer in the world with over on e million units of e port in 1995. Considering that the advanced countries have manufactured vehicles for over one hundred years, the Korean automotive indust ry has made a rapid progress since it began in the 1960`s. It was not until 1962, when the first five year economic and social developmen t plan was initiated by the Korean government, that the automotive industry beg an to take shape. Sainara Motors, the first modern manufacturer, built up the f acilities that could produce a yearly2,600 vehicles. In 1968, the production ca pacity e panded to 28 thousand units by virtue of new entrants such as Shinjin Motors, Kia Motors, and Hyundai Motors. Until then, Korea`s automotive firms ca tered only to assembling major parts such as engines, transmissions, a les, bod ies, electrical parts, and etc. by the SKD method. Indeed, local contents were very low. It was in 1976 when the first Korean model `Pony` started production that Korea `s automotive industry gained a momentum to become one of the leading manufactu res in the world. In fact, it owes chiefly to the independent development of `P ony` that Korea came to lay a solid foundation for the self supporting technol ogy and the volume production base. Within the 10 years since `Pony` was first developed, it anchored a maiden e port to the US in 1986, and the volume of e ports reached 580 thousand units in 1988. However, for the past thirty years, Korea`s automotive industry did not always have a smooth ride. In 1980, the government prohibited Kia Motors, the second l argest car maker, from producing cars in order to enlarge the economies of scal e of the other two companies in 1980 when the industry had sunk into a severe s lump jeopardizing the survival of all the big three. Kia Motors resumed car pro duction in 1987 when the industry completely surmounted the s