More Offshoring Continues in Korean Car Industry

I’ve recently discussed a ramification of Samsung’s increasing overseas production of mobile phones, while decreasing domestic production. This offshoring trend has not been limited to the electronics industry.

Hyundai and its affiliate Kia produced and sold over 1.5 million cars overseas this year, which is quite impressive. The production figure in October, nearly 180,000 was more than 40% increase from a year earlier.

What’s intriguing about this number is that the number of cars produced and exported from domestic plants fell by 12.5 percent in October also from a year earlier.

Like Samsung, Hyundai has intentionally moved its production offshore. It has five overseas factories including locations in the U.S., China and India, while Kia has two plants in China and Slovakia and is expected to operate another plant in the U.S. this month.

Amid dwindling worldwide car market, Hyundai has aggressively expanded in booming markets: China and India in particular. Hyundai has focused on increasing its local production using overseas plants rather than exporting domestically produced cars.

Again, Korea has to be mindful of the eroding manufacturing base, as I noted in the case of Samsung.

IT products and automobiles have been the two major export items of Korea.