The Dawn of Global Car Industry Changes... 59% of Domestic Parts Companies Have "No Future Car Plans"

[Asia Economy Reporter Suyeon Woo] As the global automotive industry rapidly shifts its paradigm toward electrification and autonomous vehicles, it has been revealed that more than half of domestic parts companies have yet to establish business plans related to future vehicles. Although the proportion of electronic components in the entire vehicle is expected to rise to 70%, small-scale parts manufacturers are criticized for lacking preparation for this change.

On the 29th, KOTRA released a report titled 'Global Value Chain Trends and Overseas Expansion Strategies for Future Vehicles' and disclosed the results of a survey conducted last November targeting 112 domestic small and medium-sized automotive parts companies. According to the survey, 58.9% of the responding companies stated they have no plans to develop future vehicle parts, 12.5% are planning, and only 28.6% are currently pursuing such development.

Current Status of Domestic Mid-sized and Small Parts Manufacturers Preparing for Future Vehicles / Data provided by KOTRA

In particular, 51% of these companies answered that they do not develop future vehicle parts because they "do not feel it is necessary," indicating a lack of information among domestic parts companies regarding the transition to future vehicles. A KOTRA official interpreted this by saying, "Most of the responding companies are small businesses and secondary parts suppliers, and they lack funds, technology, and market information."

Regarding improvements needed for the transition to future vehicles, 58.9% cited expanded support for research and development investment as the most important, followed by regulatory easing and legal system improvements (21.4%), and workforce training (11.6%). Additionally, the biggest obstacle to their overseas expansion was a lack of market information at 34.8%, followed by lack of funds (24.1%), shortage of specialized personnel (18.8%), and lack of creditworthiness (8.9%).

In response to these survey results, KOTRA stated, "The nascent future vehicle industry has high technological volatility and the market is shifting toward a demand-driven model, making timely provision of technology and market-related information crucial," adding, "It is necessary to prioritize support for companies possessing technological capabilities in information communication and new materials."

Meanwhile, due to the paradigm shift in the automotive industry, the proportion of electronic components in electric vehicles, currently at about 30%, is expected to expand to 70%. Promising parts include e-motors, battery systems, advanced driver assistance systems, adaptive suspension devices, lightweight and reinforced plastic materials, cameras, screens, display technologies, and infotainment solutions.

Especially in the global market, interest is increasing in domestic companies that possess technological capabilities in IT and battery industries. In Korea, the number of electronic parts companies increased by 10% last year alone, and this year, including about 70 companies supported by government business transition programs, the number is expected to grow by more than 20%.

KOTRA also introduced regional expansion strategies for domestic automotive parts companies. It analyzed that demand for electric and electronic components is high in Europe and North America, while in Japan, demand for software-based parts companies is increasing. It advised domestic parts companies to strengthen their capabilities in related parts development and production to seek overseas market entry. To this end, KOTRA plans to open a 'GP Exclusive Hall' in the second half of this year, where global and domestic companies can exchange information and collaborate on business based on a digital platform.

Kim Sangmuk, Head of KOTRA’s Innovation Growth Division, said, "We will support our companies to broaden their base in the future vehicle market," and added, "Active participation of domestic parts companies is necessary in the future vehicle sector consultation meetings with global automotive companies being promoted this year."

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