▲ View of the 34th Automotive Industry Development Forum (Photo: Korea Automobile Mobility Industry Association)


Auto Parts Exports to U.S. to Become More Difficult if U.S. Manufacturing Expands
“We must consistently speak out to ensure the government represents corporate interests”

Experts have suggested that for the automotive parts industry, local production and investment will become increasingly important in the mid-to-long term, outweighing the relationship between exports and imports.

The Korea Automobile Manufacturers Association held the 34th Automobile Industry Development Forum on the 27th at the Automobile Hall under the theme of "Measures to Enhance Competitiveness of Automobile Parts in the Transition to Future Vehicles" to solidify the foundation of the industrial ecosystem, such as responding to the transition to future vehicles and stabilizing the parts supply chain, and to seek ways to resolve difficulties faced by parts companies and enhance industrial competitiveness.

Hong Ji-sang, a research fellow at the Korea International Trade Association's Trend Analysis Office who participated in the designated discussion, stated, "While it is important for automotive parts companies to follow the direction currently taken by finished vehicle manufacturers, in the mid-to-long term, the importance of local production and local investment will increase even more than the relationship between exports and imports."

In the past, the proportion of manufacturing in U.S. GDP was in the 7% range, but it has now increased to 10.9%.

Research Fellow Hong argues that since exporting to the U.S. will become more difficult once the manufacturing infrastructure is established, companies must actively seek opportunities for expansion, such as building overseas production lines.

He then &“The roles of the government and companies are divided, and ‘trade’ is one of them,” he emphasized. “If we cannot persuade overseas buyers, we must persuade our government internally, and it is important to make our voices heard at events like this forum.”

Research Fellow Hong went on to emphasize, “If we do not speak up, the government will maintain superficial trade relations, but if we do, it will represent corporate interests at the negotiating table,” citing the Ministry of Industry’s petition to the U.S. in June as one example.

Cheon Seo-hyung, a senior researcher at the LG Management Research Institute who participated as a panelist, argued, “The key to the long-term competitiveness of parts companies lies in prioritizing product production efficiency while simultaneously building innovation capabilities to technologically lead the market. Furthermore, parts companies and automakers can mitigate potential raw material shortages by sharing operations and strategies more economically and transparently.” He added, “To establish a successful supply chain, close collaboration between industries, including automakers and parts companies, continuous technological innovation, expanded support for public-private cooperation, and increased research activities are necessary.”

Kim Kyung-yu, Head of the Systems Industry Division at the Korea Institute for Industrial Economics and Trade, stated in his presentation, “The importance of supply chain management is becoming increasingly prominent as issues such as the transition to future vehicles are added.” He added, “In a situation where parts supply chains have not yet been fully established, the rapid increase in demand for electric vehicles and the strengthening of protectionist policies for high-tech industries by various countries are exacerbating supply instability in the future vehicle sector.”

Director Kim stated that, in order to stabilize the supply chain during the transition period of the future automotive industry, it is important to secure, at a macro level, strategic autonomy that avoids excessive reliance on other countries, as well as strategic indispensability where our industries and technologies are absolutely necessary in the global industry.
Furthermore, it was suggested that, at the micro level, strategies are needed to “strengthen technological cooperation and partnerships with countries in similar positions, internalize production to increase regional manufacturing and processing capabilities, and transition supply chain management methods to expand capability development beyond mineral extraction to other stages of the value chain, such as processing, parts manufacturing, recycling, and reuse.”

▲ Kang Nam-hoon, Chairman of the Korea Automobile Manufacturers Association (Photo courtesy of the Korea Automobile Mobility Industry Association)

Kang Nam-hoon, Chairman of the Korea Automobile Manufacturers Association, emphasized, “As the pace of transition to eco-friendly vehicles accelerates, polarization among companies based on transition capabilities is intensifying. To enhance the competitiveness of parts companies during the future vehicle transition period, it is necessary to accelerate the transition of parts companies to the future vehicle industry and to continue and expand investment incentive systems for domestic future vehicle production bases so that companies that have already transitioned can secure economies of scale. Furthermore, the prompt enactment of a special act on future vehicles is required to systematically support the transition of parts companies.”