Korean Economy News
Korean auto output and exports likely to fall short of post-pandemic levels next year
2020-12-23

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South Korean automobile exports and output are expected to fall short of pre-pandemic levels next year due to heated competition as the global economy recovers from Covid-19.

According to a report by the Korea Automobile Manufacturers Association on Wednesday, automobile output from Korea is estimated to reach 3.5 million units this year, down 11.4 percent from a year ago. Korea’s global ranking in automobile shipments moved up to the fifth by the end of October from seventh 10 months ago, beating India and Mexico, with an 8.6 percent market share in the United States.

Korea was the only winner among the major markets, with domestic sales from January to October gaining 6.2 percent on year. China reported a 4.7 percent fall in sales with others like the U.S. (-17.3 percent), Japan (-14.7 percent), Germany (-22.9 percent), India (-32.3 percent) and France (-25.2 percent).

Full-year sales at home also are expected to increase 6.1 percent on year to reach a record 1.91 million units to take up 49 percent of total sales, the report showed.

The business started showing a sign of recovery in the third quarter of the year as the domestic auto industry kept most of their production facilities and staffs unchanged despite under the virus crisis.

The number of employed in the country’s auto manufacturing sector was tallied at 374,000 in October, slightly down from 378,000 in January. Foreign makers shed much more jobs during the period – Daimler 20,000, BMW 16,000 and GM 14,000.

Domestic auto parts suppliers saw an average 3.1 percent on-year rise in sales in the July-September period after suffering 16.2 percent plunge for the first six months. The 85 companies trading on bourses successfully swung to a combined operating profit of above 500 billion won from a loss of 89.1 billion won. The number of loss-making names also fell to 26 from 49.

The environment will be tougher for Korean makers in the coming year as U.S. and European carmakers will likely get their business back on track.

China also is projected to speed up efforts to expand its foray into overseas markets as its production capacity is far above the size of domestic market. Currently, its annual output reaches 50 million units, of which 25 million units are sold inside the country.

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Electric vehicle market is growing at the fastest pace. More than 50 percent of all EV (all-electrics and plug-in hybrids) sales were made in China last year, and global EV makers now are seeking output ramp-up for sales growth in the Chinese market.

The report however expected a limited growth for the domestic market due to strict regulations, subdued consumptions and a decrease in stimulus measures.

Car sales at home are estimated to fall 4.4 percent on year to reach 1.82 million units next year. Auto exports are projected to jump 22.9 percent to 2.34 million units after falling below 2 million for the first time in 16 years, and value in exports will likely gain 24.7 percent amid a rise in premium vehicles. Automobile output will increase 10.3 percent to 3.86 million units.

Exports and output fall short of 2019 levels of 2.4 million in exports and 3.95 million in output.

By Pulse

[? Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]



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