Chungnam Allocates Supplementary Budget for Revival of 'Automotive Parts Industry'... Implements Short- and Long-Term Plans

[Asia Economy (Naepo) Reporter Jeong Il-woong] Chungnam Province is establishing and implementing short- and mid-to-long-term plans to revitalize the automotive parts industry.

The province announced on the 21st that it has formulated a plan to revitalize the automotive parts industry in response to COVID-19 and decided to allocate a budget through the 2nd supplementary budget.

The short-term projects reflected in the supplementary budget include support for reemployment of retired automotive workers (1.1 billion KRW) and prototype support for 40 automotive parts companies (1 billion KRW).

Additionally, the province will increase the provincial government’s support rate for credit guarantee foundation’s accounts receivable insurance premiums from the original 50% to 60% (1.6 billion KRW) and separately implement a globalization support project (500 million KRW) to diversify overseas exports and client base.

The province plans to strengthen its own project support, such as selecting companies eligible for the short-term small and medium-sized enterprise research and development (R&D) project (700 million KRW).

From a mid-to-long-term perspective, the focus will be on transitioning internal combustion engine parts development to future automotive parts and responding to national public projects to strengthen export capabilities.

In particular, this year, with the confirmation of new national support projects such as fostering small electric commercial vehicle parts companies (8.6 billion KRW) and building a high-safety foundation for converged electronic modules (8.6 billion KRW), the province will respond to the establishment of international safety standards (ISO26262) for the automotive parts industry transition and global market entry.

A provincial official said, “Along with short-term support, we will strive to diversify future car projects in response to the ‘post-COVID-19’ era and strengthen the competitiveness of the automotive industry.”

Meanwhile, the province’s support for the automotive parts industry reflects the fact that while the industry is considered a key regional industry, it has been struggling due to continuous adverse conditions recently.

Currently, there are a total of 611 automotive-related companies distributed in Chungnam, employing about 43,000 workers and producing 580,000 complete vehicles annually. The resulting sales scale is approximately 22 trillion KRW.

However, due to the COVID-19 crisis, automotive parts sales have decreased by 40% since January, and exports in the first quarter have dropped by 21%, indicating accumulating damage.

Furthermore, the province analyzed that even before the COVID-19 crisis, the annual decline in complete vehicle production has caused sales slumps and worsening management funds for automotive parts companies.

Domestic automobile production has decreased from 4.56 million units in 2015 to 4.23 million in 2016, 4.11 million in 2017, 4.02 million in 2018, and 3.95 million last year, showing a reduction of 610,000 units over the past five years.

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