A deep understanding of history of Korean auto industry (2) Entering North America and China
A deep understanding of history of Korean auto industry (2) Entering North America and China
  • May 31, 2023

As they say, "People aren't happy for a thousand days, and flowers aren't popular for a hundred days."

The trajectory of South Korean automotive industry from existence to prosperity is almost same as that of Japanese companies, which is also due to many assistance provided by Japanese companies at an early stage. When Japanese auto companies took advantage of first oil crisis to successfully open up North American market with economical and practical features, Korean auto companies got whiff of brownies too.

Korean auto companies enter North American market

During 1980s, when Korean auto industry was booming in its homeland, Japanese auto companies were already firmly established in North American continent and launched luxury brands one by one in an effort to cater to Koreans' consumer preferences. Americans. From 1976 to 1986, with successful entry of Hyundai PONY into North America, South Korean car companies also officially began to conquer mainstream market.

Actually, Americans didn't have a high sense of identity with foreign brands at first. Along with first oil crisis, "Mask Law" passed by US government explicitly required strict emission standards for next generation models (the equivalent of The China 7 standard was explicitly proposed in China 5 phase), and it was announced that whoever could come this bill was once met with a joint boycott of three giants in US.

A deep understanding of history of Korean auto industry (2) Entering North America and China

However, after Honda's CIVIC, equipped with an environmentally friendly CVCC engine, and Mazda overcame difficulties with rotary technology, American auto giants were speechless. At same time, improvement of economy also made American people applaud in shadow of oil crisis Applause, this is first time a foreign brand has been recognized by public.

But there's only one chance, and Korean car companies can't wait for that golden opportunity. As a result, South Korean car companies have upgraded their North American entry strategy, making most of American components in foreign countries and adding North American attributes to a complete car, which is tantamount to solving economic problems from a political point of view, and finally received approval of people in North America.

Cars are consumables, and quality is an indicator of period of consumption. Korean cars apparently followed old path of Japanese cars: early on they relied on economy and low prices to conquer world, but later on quality was a concern. As quality of Japanese cars gradually improved, sales of Korean cars gradually declined. Therefore, Korean companies set up a technology research and development center in United States, and used a high degree of cooperation to introduce a large number of American automotive technologies, and finally offered a ten-year 100,000 kilometers warranty service...

One hundred thousand kilometers in ten years, that's aftermarket policy of Korean cars in US in 1990s, can you believe it? But in any case, extreme sincerity was returned to market, making Korean cars an important role in North American continent in one fell swoop, and even in millennium, price of models of same level was close to that of Toyota. . During this time, South Korean Daewoo Motors filed for bankruptcy due to Asian financial crisis and was acquired by General Motors in United States.

In 2009, global financial crisis caused by subprime mortgage crisis cast a shadow over global economy. , one of three American auto giants, was on verge of bankruptcy. Hyundai, which had by then taken over Kia Motors, introduced a policy of stupefying subservience in US, working with insurance companies to implement an owner protection plan.

A deep understanding of history of Korean auto industry (2) Entering North America and China

The plan is as follows: "Any car owner who buys a modern car within one year, if he cannot pay off his mortgage due to unemployment, can return car to manufacturer, and insurance company will cover depreciation costs of $ 7,500." During crisis, North American region achieved an increase in productivity of about 15% and picked up enthusiasm of American people for Korean cars, and even Genesis became American Car of Year. .

A deep understanding of history of Korean auto industry (2) Entering North America and China

We should know that productivity of US auto companies has fallen by 40% over same period. And 2009 became an important node. What was going on in mainland China at that time?

Road of Korean cars to China

The first batch of Hyundai Maxima and Daewoo racing cars donated to 1990 Asian Games was first Korean car to appear in China. The quality of this batch of cars is extremely unstable, and it is completely different from Japanese cars. To be honest, although these cars were donated, they did not make a good impression on Chinese.

Subsequently, Korean cars were gradually introduced into country through imports, but they were not given much attention. At this time, in Chinese market, SAIC Volkswagen Santana has become favorite of Chinese people. With gradual opening of market, great opportunities are brewing.

In 2002, China joined World Trade Organization. In same year, Beijing Hyundai and Dongfeng Yueda Kia joint ventures were established. Biss built its first overseas parts manufacturing plant in Jiangsu Province.

A deep understanding of history of Korean auto industry (2) Entering North America and China

Korean cars showed best results in this campaign. Firstly, these are first large-scale cooperation projects in auto industry after China's accession to WTO, they are far ahead of entry of Toyota, Nissan and other giants into China, and scale of cooperation is unprecedented. over a period of about 7 years.

Over past seven years, Korean cars have produced a total of 200,000 vehicles in just two years, and early models such as Maxima, Accent, Cerato, Sonata, Sportage and Tucson have emerged and are often listed in top five passenger cars in China .On strong list. But at same time, Korean cars did not make a special impression on Chinese, because imported models do not have outstanding characteristics.

A deep understanding of history of Korean auto industry (2) Entering North America and China

For example, Tucson lost its competitiveness after release of CR-V, and Cerato and Accent also found themselves vulnerable to old Toyota Corolla. Not to mention "Maxim", which has always been basis of rental operations and is gradually moving from second-tier cities to third-tier cities.

A deep understanding of history of Korean auto industry (2) Entering North America and China

When time came to implement 2009 policy of halving tax on purchase of small cars, my country entered heyday of automotive industry, but at that time market was not saturated, and product matrix of main brands was not ideal. This is a demographic dividend and market gap dividend. Korean cars have also gained recognition in market due to their high discounts, high looks and high bundling.

Extremely representative are eighth generation Sonata and Beijing Hyundai's ix35, as well as Kia K5 and Smart Run generations of Peter Hiller's famous "Whistle Front". It is worth noting that in addition to models of two brands Hyundai-Kia, Excelle, Jingcheng, Lefeng and other models that we bought at that time were produced by South Korean Daewoo and sold by SAIC-GM. continent reached.

A deep understanding of history of Korean auto industry (2) Entering North America and China

We've all become familiar with market since then, so there's no need for additional expressions. After 2016, Korean cars are in decline and there is no sign of survival. Even today, no matter how many new cars are released, they are still in a hurry. The reason behind this is that Korean cars in China do not have sincerity like North America, and own brands take 2015 as first year of Nature's rapid growth.

In 2016, sales of Beijing Hyundai and Dongfeng Yueda Kia, two Korean car joint ventures in China, remained almost same as in 2015. Hyundai Motor sales were up 7.5% year on year and Kia Motors sales were up 5.5% year on year. Sales growth lags behind major Chinese brands.


Combined with the current sales of Korean cars, some people always say that their own brands can abuse Korean cars and even make useless Korean cars disappear. In fact, this statement is neither right nor wrong.

A deep understanding of history of Korean auto industry (2) Entering North America and China

Firstly, it was Korean cars that failed, not Korean brands; secondly, Korean cars still dominate world and they may even continue to ignore Chinese market; Finally, attitude of Korean companies towards mainland Chinese market will never be same. If Americans are so flattered, otherwise more sales and policy resources will be shifted towards China, and it is still possible to turn tide.

In next article, we will talk about the confidence of Korean cars.