The Secret Behind Korean Cars' Rising Global Market Share Amid COVID-19

[Asia Economy Reporter Su-yeon Woo] Amid the rapid halt in sales and production in the global automobile market due to the novel coronavirus infection (COVID-19), Korean car brands are gaining attention for increasing their global market share. This is attributed to Korea's swift response to COVID-19, which has kept domestic market demand steady and maintained a high operating rate at domestic factories, minimizing production disruptions.

According to the Korea Automobile Manufacturers Association on the 2nd, global automobile market sales in the first quarter of this year totaled 11.205 million units, a 27.5% decrease compared to the same period last year. While sales of all brands by country generally declined, the hardest hit markets were China, where COVID-19 spread first, and Europe, where movement restrictions were enforced from mid-March. In contrast, the U.S. market experienced relatively less negative impact in the first quarter as movement restrictions were fully implemented only from the end of March, resulting in a limited decrease in vehicle sales.

[Image source=Yonhap News]

Looking at market share by brand nationality, American and Japanese brands, which focus on the U.S. market, saw their shares expand. The U.S. brands' market share in the first quarter rose by 1.7 percentage points year-on-year to 19.9%, while Japanese brands increased by 0.9 percentage points to 26.3%. Conversely, European and Chinese brands, whose main markets are Europe and China respectively, saw their shares decline by 0.3 percentage points and 3.5 percentage points, recording 31.5% and 11.4% respectively.

Korean brands experienced a relatively smaller decrease in sales, resulting in an increase in market share by 1.2 percentage points year-on-year to 8.4%. This can be attributed to Korea's early containment of COVID-19 after its rapid spread compared to the global situation.

While operating rates at global factories in the U.S., Europe, and other regions dropped significantly, domestic factories maintained operations with minimal disruption. As of mid-April, the average operating rate of global factories for automobile manufacturers worldwide was about 29%, whereas Korean automakers (Hyundai Kia Motors) maintained a factory operating rate of 64.7%, roughly twice the global average.

Governments worldwide are implementing various support measures to revive the global automobile market amid production halts and sales cliffs. The U.S. has temporarily eased environmental regulations to reduce burdens on manufacturers, China is promoting domestic demand through extensions of electric vehicle subsidies, and Europe is seeking to enhance industrial competitiveness by maintaining employment.

The Korean government has also introduced various policies, including large-scale liquidity support, but industry experts agree that timely and proactive support is necessary. Jeong Manki, chairman of the Korea Automobile Manufacturers Association, stated, "Although the government has prepared various support measures related to liquidity, there is a concern that companies may face significant difficulties as it takes time for the support to be implemented," adding, "Active government management is needed to ensure that existing measures are effectively operated on the ground."

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