Korean market and domestic brand trends: Semiconductor shortages reducing production and sales
Hyundai Group accelerates electrification, Korean government presents battery strategy
2022/03/01
- Summary
- Korean government policies: Tax break extension, joining RCEP, and battery strategy
- Domestic market share: Hyundai Group declines to 61%, imports’ share grows to 16%
- Production volume: Declining to 3.462 million units in 2021, down by 1.3% y/y
- Korean automakers’ production capacity of 4.813 million in Korea and 5.48 million overseas
- Hyundai Motor Group: Aiming to sell 1.7 million EVs in 2026
- GM Korea: Semiconductor shortage and preparation for new model reduce production
- Renault Samsung: Samsung sells its entire stake, partnership with Geely Group
- Ssangyong: To be sold to Korean EV start-up Edison Motors
- Sales forecast by LMC Automotive: Korean light vehicle sales expected to be 1.91 million units in 2025
Summary
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Korean vehicle production in 2021 decreased by 1.3% year-over-year (y/y) to 3.462 million units while sales in the country declined by 10.6% y/y to 1.441 million units. Semiconductor supply shortages led to lower production, and thereby, stagnant sales at OEMs. On the other hand, exports from Korea increased by 8.2% y/y to 2.041 million units. Export destinations including major countries and markets enjoyed vehicle demand growth, recovering from the impact of the COVID-19 pandemic.
The Korean government will extend its measures to reduce the individual consumption tax on cars to support the automotive industry until the end of June 2022. Regarding the activities related to vehicle exports, the “Regional Comprehensive Economic Partnership (RCEP)” went into effect in Korea on February 1, 2022. Since Japan, China and ASEAN countries are participating in the RCEP, vehicle exports from Korea are expected to increase in the future.
The Korean government set a target to reach carbon neutrality by 2050. The government is promoting the use of EVs to achieve this goal, and in July 2021, presented its strategy to develop the EV battery industry.
The Hyundai Motor Group enjoyed strong sales in 2021 through supply chain management and expanded sales of SUVs and Genesis luxury brand models despite the impact of the semiconductor supply shortage. The group is accelerating its electrification strategy, raising the EV sales target for 2026 from 1 million to 1.7 million units.
GM Korea is facing stagnant production, sales and exports due to a lack of semiconductor parts and the suspension of plant operations in preparation for the production of the new CUV model.
In August 2021, Renault Samsung announced that Samsung would sell its entire stake in the company and it will operate its business in South Korea under the Renault brand starting in the second half of 2022. On the other hand, in January 2022, Renault Samsung partnered with Geely Holding Group to introduce the new models including hybrid vehicles using Geely’s technology into the Korean market.
Ssangyong, which filed for corporate reorganization proceedings in December 2020 and had been looking for a buyer, signed an acqisition contract with a consortium led by Edison Motors, a South Korean electric bus start-up. The company will rebuild its business under a South Korean EV manufacturer.
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| Genesis G90 full-size sedan (Photo: Hyundai Motor) | Kia Niro all-new compact SUV (Photo: Kia) |
Korean vehicle production, sales, exports, and imports
(Units)
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|---|---|---|
| Production in Korea | 4,524,932 | 4,555,957 | 4,228,509 | 4,114,913 | 4,028,834 | 3,950,614 | 3,506,774 | 3,462,299 |
| Sales in Korea | 1,463,893 | 1,589,393 | 1,600,154 | 1,560,202 | 1,552,346 | 1,539,766 | 1,611,218 | 1,440,779 |
| Exports | 3,063,204 | 2,974,114 | 2,621,715 | 2,530,194 | 2,449,651 | 2,401,383 | 1,886,683 | 2,040,572 |
| Imports | 196,359 | 243,900 | 225,279 | 233,088 | 260,705 | 241,510 | 262,404 | 267,171 |
Source: KAMA (Korea Automobile Manufacturers Association)
Note: Sales in Korea do not include imports.
Related reports:
Decarbonization - Global agreement at COP26 and its deployment to regions/OEMs (Jan. 2022)
Hyundai Motor Group: Aiming to sell 1 million EVs a year in 2025-26 (Aug. 2021)
Auto Shanghai 2021: NEVs of Non-Chinese OEMs (Apr. 2021)
Korean market and trends of domestic brands: Tax breaks boosting domestic sales (Nov. 2020）