Car Exports in the First Half of the Year Fall Below 1 Million Units for the First Time in 11 Years

Impact of COVID-19: 826,710 Units in H1... First Time Since 2009
Global Decline... Production Rises from 7th to 4th Worldwide
Exports Negative for 11 Consecutive Months... Recovery to 100,000 Units
Ministry of Industry: "COVID-19 Causes Unsold Inventory and Factory Shutdowns"
Eco-friendly Vehicle Exports Surge... Electric Cars Up 82%, Hydrogen Cars Up 68%
Ministry of Industry: "Green New Deal Shows Potential as Export Growth Engine"

[Asia Economy Reporter Moon Chaeseok] Due to the impact of the novel coronavirus infection (COVID-19), South Korea's automobile exports in the first half of the year fell below 1 million units for the first time in 11 years. This was influenced by lockdowns in major countries, a sharp decline in overseas sales, and unsold inventory.

According to the "Monthly Trends of the Domestic Automobile Industry for the First Half and June" announced by the Ministry of Trade, Industry and Energy on the 14th, domestic automobile exports in the first half of the year remained at 826,710 units. This is a 33.4% decrease compared to the same period last year. After staying at 938,837 units in the first half of 2009, exports fell below 1 million units for the first time in 11 years.

By region, North America -18.1% ($7.81 billion), European Union (EU) -30.7% ($3.46 billion), Other Europe -99% ($810 million), Asia -73.7% ($821 million), Middle East -31.6% ($1.676 billion), Latin America -243.8% ($381 million), Africa -43.7% ($182 million), Oceania -74.8% ($695 million) all suffered significant declines.

An official from the Ministry of Trade, Industry and Energy explained, "The government attributes this to lockdowns in major countries due to the COVID-19 pandemic, a sharp drop in overseas sales, and the inability to clear local dealership inventory."

[Image source=Yonhap News]

Narrowing down the total export performance to the past month, it failed to escape the slump of '11 consecutive months of decline.' Although it fell below 100,000 units for the first time in 17 years in May, it recovered last month.

Last month, domestic automobile exports were 132,514 units, down 37.4% compared to the same period last year. In May, exports dropped to 95,400 units, falling below 100,000 units for the first time in 16 years and 10 months since July 2003's 86,074 units.

Exports increased by 11.6% year-on-year in July last year but have been declining ever since. The monthly changes were: August last year (-3.4%), September (-4.8%), October (-10.2%), November (-8.6%), December (-6.7%), January this year (-28.1%), February (-1.6%), March (-10.3%), April (-44.3%), May (-57.6%), and last month (-37.4%).

The Ministry explained, "Although major country dealerships have gradually resumed operations, local inventory in key markets has not yet been cleared." In May, the Ministry also cited 'unsold inventory' as the reason for poor export performance.

Exports of automobile parts were also severe. They amounted to only $950 million, a 44.7% decrease compared to the same period last year. The ongoing impact of COVID-19 extended the shutdown period of overseas automakers' factories, causing damage. The Ministry gave a similar explanation in May.

Specifically, North America -49.6% ($321 million), European Union (EU) -60.8% ($125 million), Asia -42.2% ($236 million), Middle East -33.8% ($54 million), Latin America -67.8% ($28 million), Africa -25.6% ($14 million), Oceania -25.2% ($7 million) all experienced near-total declines. Only Other Europe saw a 0.3% increase ($160 million).

However, eco-friendly vehicle exports recorded 127,626 units, a 14% increase year-on-year. Electric vehicle exports rose 81.9% to 55,536 units, and hydrogen vehicle exports increased 67.7% to 681 units. An official from the Ministry explained, "Despite the global demand contraction, strengthened carbon dioxide regulations mainly in the U.S. and Europe, and the expansion of electric vehicle launches this year led to rapid growth in electric vehicle exports, driving overall eco-friendly vehicle exports."

The government is promoting the supply of 1.13 million electric vehicles and 200,000 hydrogen vehicles under the Green New Deal policy. From this year until 2025, it plans to invest 385.6 billion KRW in technology development projects. Additionally, more than 23 types of electric and hydrogen vehicles are planned to be launched by 2025.

Prime Minister Chung Sye-kyun, Minister of Trade, Industry and Energy Sung Yun-mo, Chung Man-ki, Chairman of the Korea Automobile Manufacturers Association and Organizing Committee Chairman of the Hydrogen Mobility+ Show, and Chung Eui-sun, Executive Vice Chairman of Hyundai Motor Company, are touring the Hyundai booth and receiving explanations at the '1st Hydrogen Mobility+ Show' held on the 1st at KINTEX in Goyang, Gyeonggi Province. Photo by Kim Hyun-min, Goyang kimhyun81@

Narrowing down to last month, electric vehicle exports increased by 174.8%, and hydrogen vehicle exports rose by 329.6%. Overall eco-friendly vehicle exports increased by 36.2% to 25,064 units.

Electric vehicle exports have increased for 35 consecutive months. In June, exports of all models including Ioniq (33.2%), Kona (98.1%), Soul (128.4%), and Niro (495.4%) increased, setting a record for the highest exports for three consecutive months. A total of 13,515 units were sold abroad.

An official from the Ministry evaluated, "It demonstrated growth potential as a new export engine through the Green New Deal."

[Image source=Yonhap News]

Production in the first half of the year was 1,627,534 units, down 19.8% compared to the same period last year. Due to the impact of COVID-19, parts inventory shortages led to the suspension of some factories in February, and production adjustments due to weakened overseas sales demand from March to June had adverse effects.

Still, it performed better than the maximum decline rate of -53.1% among major automobile producing countries from January to May, recording -21.5%. During the same period, South Korea's production ranking jumped three places from 7th to 4th in the world based on last year's data. This was the result of quickly overcoming production disruptions caused by COVID-19.

Domestic sales in the first half increased by 7.2% to 930,464 units. Especially from January to May, while sales demand sharply declined in the U.S., Europe, and other regions, South Korea recorded a slight increase of 0.3%.

Specifically, India -54.2%, United Kingdom -51.1%, Italy -49.7%, Brazil -37.7%, Canada -37%, Germany -34.3%, United States -23.2%, China -22.7%, Japan -19.2%. Except for France's 46.6%, few countries performed better than South Korea.

The Ministry cited the reasons for strong domestic sales as ▲ sales increase due to domestic demand stimulation policies such as individual consumption tax cuts ▲ rapid overcoming of production disruptions through thorough COVID-19 quarantine measures.

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