In 2008, Korea manufactured 4 million automotive vehicles, making it the fifth largest car manufacturer in the world after Japan, the U.S., China, and Germany. The total size of the automotive parts market was estimated at USD 36 billion in 2008, a 21 percent drop from 2007. The OEM market segment accounted for about 94 percent of total market demand and the aftermarket approximately represented the remaining 6 percent.
Imports decreased to USD 3.9 billion in 2008 from 4.0 billion in 2007 to account for 11 percent of the total market demand. The drops in 2008 statistics are mainly due to the substantial KRW depreciation against USD. When looked at on KRW basis, the market has experienced a nominal 3% decrease overall.
In the import market, Asian countries including Japan are the principal exporters to Korea, accounting for 48 percent of total imports. The EU and North America follow Japan with a 38 percent and 12 percent market share, respectively.
Major U.S. export items for the OEM market include gear boxes, wheels, steering parts, and engine parts, among others. For the aftermarket, road wheels, spark plugs, and ignition cables, among others, are well received U.S. products.
In the era of global competition in the automotive industry, Korean OEMs are expected to expand global outsourcing practices for the procurement of parts and accessories. Industry sources predict that the launch of Hyundai Motors’ manufacturing plant in Alabama, and the planned launch of Kia Motors’ Georgia plant in 2009 will accelerate this trend.
- Leading-edge engine design, engine control units (ECU), electronic engine parts
- Advanced core parts, including automatic transmissions, anti-lock brake systems and air bags
- Hybrid cars, fuel cell cars, and other low-emission related technologies
For the aftermarket:
- Replacement parts
- Spark plugs
- Ignition cables
- Timing belts
- Wiper blades
- High-end car audio systems and components
- High-performance automotive chemicals, such as wax and rust-proofing solutions
- Accessories, like window films.
U.S. suppliers need to be aware of the competition, and offer products with technological advantages that the competition does not have. They also need to educate end-users about the advanced features of their products. It is strongly recommended to partner with a qualified and capable Korean distributor who maintains its existing sales network to serve end-users. Exhibiting at local automotive trade shows can be a useful platform to explore the market and gain exposure to end-users.
Tapping into Korean automaker plants in the U.S. and U.S. parts suppliers with a manufacturing base in Korea is highly recommended to gain access to the Korean market. Most of the major auto parts suppliers have a manufacturing base in Korea, which include Delphi, Visteon, TRW, Johnson Automotive Controls, etc.
For the aftermarket, U.S. companies are recommended to supply through existing channels that include OEM’s after-sales service networks, automotive service franchises, independent auto service shops, etc.