Sung Yun-mo, Minister of Industry, "COVID-19 Response... Full Effort to Maintain 'Car Ecosystem' Including Support for European Customs Clearance"

Preparation for Parts Supply Disruptions Including Rapid Customs Clearance and Transport Convenience in Europe
Encouraging Administrative Agencies, Local Governments, and Public Institutions to Purchase Cars This Year... "Boosting Domestic Demand"
Securing Liquidity for Parts Companies... Expanding P-CBO from 700 Billion to 1.5 Trillion Won Through Supplementary Budget
Swift Execution of 320 Billion Won for Automotive Parts Technology Development Funding in the First Half
Following the 50 Trillion Won 'Livelihood and Financial Stability Package Program'
"Planning to Announce Additional Financial Support Measures"
Industry: "Operating Fund Loans and Repayment of Existing Funds

Sung Yun-mo, Minister of Trade, Industry and Energy./Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Moon Chaeseok] The government announced that it will minimize supply and demand disruptions following the shutdowns of factories by major companies in Europe due to the spread of the novel coronavirus infection (COVID-19). It also stated that it will strive to prepare additional business stabilization support programs through inter-ministerial consultations. The industry requested not only financial support such as operating fund loans and deferment of repayment of existing funds but also the relaxation of eligibility requirements for employment retention subsidies for business owners who endure by closing or taking leave due to confirmed COVID-19 cases.

On the 23rd, Sung Yun-mo, Minister of Trade, Industry and Energy, held a meeting with representatives of partner companies of domestic automakers at the Korea Automobile Industry Cooperative in Seocho-gu, Seoul, and announced this. The meeting was attended by Ministry of Industry officials including Minister Sung, industry figures such as Shin Dalseok, Chairman of the Korea Automobile Industry Cooperative, Oh Won-seok, Chairman of Korea FT, as well as support institution officials including Heo Nam-yong, President of the Korea Automotive Research Institute, Baek Seung-dal, Vice President of the Korea Trade Insurance Corporation, and Kim Chung-bae, Executive Director of the Korea Credit Guarantee Fund.

Minister Sung said that the shutdown of automaker factories and dealerships in Europe and the United States is expected to negatively affect exports of domestic finished cars and parts. He revealed concerns about supply disruptions of some parts imported from Europe, such as diesel engine parts, transmissions, and system semiconductors. Europe and the United States are major markets accounting for 69.1% of our finished car exports and 54.2% of parts exports.

As a result of an emergency inventory check of major parts imported from Europe conducted by the Ministry of Industry and the finished car industry, it was confirmed that our finished car companies have already secured inventory for more than 1 to 2 months. Since early this month, the government has been reducing the individual consumption tax on new cars by 70%. From the 1st to the 19th, the average daily export was -13.5% compared to the same period last year, and the average daily production was -8.1%, but the average daily domestic sales barely held at -0.2%.

Minister Sung emphasized, "In an unprecedented crisis where both demand and supply in the automobile industry are shrinking simultaneously, enduring and surviving this wave is the most important point." He added, "The government recognizes the current situation very seriously and will provide all possible support so that our automobile industry can overcome the current crisis."

Specifically, efforts will be focused on ▲preparing for possible supply disruptions of parts from Europe ▲promoting domestic demand stimulation measures ▲and supplying liquidity to parts companies.

First, full efforts will be made to support rapid customs clearance and transportation services in major markets such as Europe. To prepare for the prolonged COVID-19 situation, the government will help our industry secure sufficient safety stock.

Measures to stimulate domestic demand in the automobile industry will be promoted to support securing orders. In addition to the 70% reduction in the new car individual consumption tax, the government is considering encouraging administrative agencies, local governments, and public institutions to purchase vehicles this year.

Efforts will be made to supply sufficient liquidity to our parts companies. Through this supplementary budget, the supply scale of principal industry bond collateralized securities (P-CBO) will be more than doubled from 700 billion won to 1.5 trillion won. The support limit per company will also be significantly expanded.

3.2 billion won in automobile parts technology development funds will be promptly executed in the first half of the year. This means that the government will concentrate the allocated support funds in the first half of the year.

An announcement of additional financial support measures is also planned. Earlier, on the 19th, the government held an emergency economic meeting chaired by President Moon Jae-in and announced a 50 trillion won 'Livelihood and Financial Stability Package Program.'

Minister Sung said, "The Ministry of Industry is consulting with financial authorities on additional business stabilization support programs," and added, "We will check to ensure that financial support measures, including those already in operation, are well provided to the industry."

He continued, "I ask the finished car industry to expand win-win cooperation with parts companies and for labor and management to unite in efforts to overcome the crisis."

Meanwhile, representatives of partner companies attending the meeting proposed ▲bold financial support (operating fund loans, deferment of repayment of existing funds, etc.) ▲relaxation of eligibility requirements for employment retention subsidies (partial support of labor costs when business owners maintain employment through worker leave or furlough due to confirmed COVID-19 cases) and rationalization of procedures.

This content was produced with the assistance of AI translation services.