Deep understanding of history of Korean auto industry (1) Incredibly fast growth
Deep understanding of history of Korean auto industry (1) Incredibly fast growth
  • May 31, 2023

It is undeniable that films "Changjin Lake", "Shuimen Bridge" and "Sniper" wrote about epic victory of volunteers, and also revived enthusiasm of young people in a new era to reimagine that period of history. . Behind works of art stands firm conviction of our volunteers when they fought against imperialist aggression, and behind "coming from life and above life" we must have a prudent position on path to rebirth.

So, those of us in automotive industry, what should we consider? How careful?

How did Korean auto industry come about?

78 years ago, peninsula between 34 degrees north latitude and 38 degrees north latitude and 126 degrees east longitude and 130 degrees east longitude, where there was no sign of development of automobile industry, was still under rule of Japanese invaders. -Korean war in history Let this land be devastated, poverty and hunger are main problems that people on this land must urgently solve.

At end of 1944, Jingcheng Precision Industry was established in South Korea. The process of this factory, which basically produced structural steel parts for bicycles from scratch, is embarrassing and surprising in equal measure: eight years later (two years after Korean War began), bicycle was literally being made in Korea, and it was a surprise that factory was officially renamed Kia Industries.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

That's right, just like Shanghai Naval Cannon Bureau founded by Li Hongzhang, home of Chang'an Automobile in my country, forerunner of Kia Motors, was established some 80 years later, but at least it was established. The original LOGO of company is three English letters KIA, and Chinese interpretation is also clear - starting from moving side and from Asia. As far as I know, it seems that main visual image of LOGO has not changed so far.

According to many existing materials on development of automotive brands, following conclusions can be drawn:

  1. The forerunners of automotive brands outside of North America are all parts suppliers, machine processing plants and even various light industry workshops that are not related to each other in any way;
  2. There must be a war to help transform it so that enterprises can absorb financial resources and improve industrial production capacity during war;
  3. Have a healthy growth mindset;
  4. Good luck.

The first two points are obvious, including Rolls-Royce, Citroen, Peugeot, Honda and even BMW have similar development trajectories. Flat earth, and after founder's mysterious operation several times, rest of feelings are all in mirror; Another example is German company Adler Automobile, which produced armored vehicles and trucks with top-notch research and development, production, and production technology, but was eventually completely bombed out by Allies.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

Thus, it was time for Korean War to begin in 1950. Due to a severe lack of maneuverability for hauling goods at time, Kia was ordered by South Korean government to refocus on manufacturing heavy-duty vehicles. , and Kia Industries moved down path of automotive production. However, drawings, raw materials and spare parts do not require independent R&D and design, so combat missions are still performed in form of processing and assembly.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

The Korean War lasted 3 years, and Kia Industries survived until end of war. However, Korea during reign of Syngman Lee was very chaotic and materials left behind by Kia Industries are very few, perhaps they do not want world to know too much about that period of history. It wasn't until Park Geun-hye's father, Park Chung-hee, came to power that South Korea had just entered recovery phase, and Kia Industries finally embarked on path of producing conventional civilian vehicles.

40 years from existence to prosperity

The time has come in 1960s. With US funding, Park Chung-hee formulated a five-year plan for development of automobile industry in 1960s, and South Korea set off a wave of development in automobile industry. .

This paragraph is also easy to understand. After World War II, Volkswagen, Ferdinand Porsche-designed Beetle became national car in one fell swoop, and after World War I, Henry Ford used assembly line model to allow T-cars to enter thousands of households in United States. Ten thousand households. Behind this is a huge demand for civilian use, which is also a prerequisite for Western thinking when developing fundamental development ideas. Of course, most important thing is that the car be cheap.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth Deep understanding of history of Korean auto industry (1) Incredibly fast growth

It is worth noting that since 1960s, Korean automobile industry has continued to use SKD method of manufacturing, importing important parts and assemblies and assembling them into a complete vehicle by assembling large parts.

For example, this production method is exactly same as that of Coca-Cola. Concentrated puree mixed with water can be filled with gas, which makes canning process most difficult. Although it can solve problem of drinking Coke, but original puree cannot be produced in a hundred years of canning, and we call it puree formula It is "core technology" , but having said that, at least you can learn how to preserve it in process.

Subsequently, South Korean auto industry began to test production of CKD, that is, complete assembly of parts. Same example, this time we add water to cola puree, control ratio, and then pump into jars. Despite fact that there are more processes, few people still look into main technology.

During this period, South Korea began to cooperate with many Japanese automobile companies, including Nissan and Toyota, while Hyundai Motor Company also cooperated with Ford, Fiat and other brands. It is not difficult to analyze that after Hango auto industry faced messy production of SKD and CKD, it made almost no progress, and even many Japanese-funded companies closed one after another.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

The data show that in decade from 1961 to 1970, total annual production of Korean cars was only 28,000 units. If it goes on like this, Korean cars will face an important moment of life and death.

In 1970, South Korean government formulated an incubation plan for automobile industry, firmly set goal of localizing important parts, and even formulated a duty-free policy for raw materials used to produce important parts. In just three years, Kia Motors' Soxia-ri plant was officially completed, becoming first major plant in Korea capable of producing complete vehicles, as well as Korea's first gasoline engine. In same year, Hyundai Motor Company introduced engines, transmissions and chassis to Japanese corporation Mitsubishi.

In a series of operations in 1974, Hyundai Motor Company produced PONY, a car developed by Hyundai itself, and successfully exported it to Latin America within two years. At that time, localization rate of parts for major Korean car brands reached 85%.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

The growth of industry will attract not only predators, but also recklessness. The trend of discord between a hundred schools is always a sign of prosperity, but it also brings mixed business formats and fake products. When an industry is booming, every company is sweeping door, and when an industry is in decline, it will be a big wave to save real money.

After second oil crisis in 1979, shortcomings of "two kings with one stack of two" appeared in Korean automobile industry. Due to sharp increase in world oil prices and other factors, purchasing power of population decreased, which further led to overproduction. This is similar to changes in structure of industry after my country promoted national emissions.

In order to cope with oil crisis and preserve overall situation in Korean auto industry, government has shifted it from decentralization to centralization. production of spare parts and support of deliveries in order to rationally allocate limited resources.

During this change, Hyundai Motor and Daewoo Motor produced cars exclusively for civilian use. Hyundai immediately established an automotive technology company, sent students to study abroad, and focused on developing R&D talent. Daewoo Motors partnered with General Motors USA in 1972 and formed a joint venture. The business of trucks up to 5 tons is monopolized by Kia Motors and Asia Motors, which laid foundation for Kia's subsequent acquisition of Asia.

It is this pattern that distinguishes South Korean automotive industry. In mid-1980s, with recovery of world economy, economic development of South Korea reached a new level, and demand of population for private cars grew. Here, Hyundai Group built a plant with an annual capacity of 300,000 units for production of Hyundai PONY (Continental's small brand) and Hyundai EXCEL (called Excellence in South Korea and Excelle in my country), as well as South Korean Daewoo Automobile, have also completed construction of a civilian car plant with an annual capacity of 170,000 units.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth

At this time, South Korean automobile industry made a qualitative leap, from bottom of valley with an annual output of less than 40,000 units to a peak annual output of 370,000 units, and then reached an annual output of 600,000 units in 1986 (theoretical production capacity reached 2 million units), and volume of exports repeatedly broke new highs.

In 1990, South Korean Daewoo Motors' first self-designed car, called "Prince", was released, opening up opportunity for Korean car companies to break away from foreign partners and embark on a path of completely independent research and development. , and finished car went abroad. Since then, South Korea has experienced a period of continuous growth for 8 years and has become ninth largest car manufacturer in world.

Deep understanding of history of Korean auto industry (1) Incredibly fast growth


The development of Korean automotive industry can be described as fast-paced, but there are many experiences behind its rapid development that are worth learning. First, it is need to adopt doctrine at infancy of automobile industry, which is an indispensable initial experience for development of automobile industry; secondly, it is a strong policy support and understanding of speed of localization of parts and components, as well as final orientation of independent research and development; The third is to create a model enterprise and increase size and iteration of automotive industry through catfish effect.

From initial development of South Korea's auto industry, it can be seen that my country's auto industry has also embarked on same path, and scale and speed are even higher. However, this is not a reason for us to conclude that “domestic cars are crushing Korean cars.” In next article, we will talk about deeper aspects of Korean auto industry.