Economic Organizations Appeal to Prime Minister Kim Bu-gyeom to "Save the Auto Parts Industry"

Korea Federation of Medium-Sized Enterprises, Korea Automobile Manufacturers Association, and 7 Other Organizations Deliver Recommendations

[Asia Economy Reporter Yoo Byung-don] Representatives of organizations related to the automobile industry, which is facing unexpected adversities such as semiconductor supply shortages and rising raw material prices, have spoken with one voice.

On the 12th, according to the business community, Kang Ho-gap, Chairman of the Korea Federation of SMEs, Jeong Man-gi, Chairman of the Korea Automobile Manufacturers Association, and Lee Gwan-seop, Vice Chairman of the Korea International Trade Association, met with Prime Minister Kim Boo-kyum at the government Seoul office to explain the current issues of the parts industry and deliver government-related requests. The representatives appealed, "The parts industry has been pushed into a situation where survival is uncertain, and if left unattended, the foundation of the industry will be shaken."

They also expressed concern, saying, "Many parts companies that made large-scale investments according to new car development schedules are facing financial difficulties due to delays in finished car production. If financial support to help them overcome the immediate crisis is not provided, many companies will be forced to close."

They identified the following as crisis factors: ▲delays in automobile production due to semiconductor supply shortages ▲rising raw material prices and increased logistics costs ▲reduction in sales of internal combustion engine parts due to the government's excessive carbon neutrality policies. Chairman Kang said, "Obstacles that were unimaginable in the past, such as semiconductor supply shortages, are appearing one after another," and added, "The reality is that even companies with technological competitiveness are being pushed into liquidity crises and forced to close." Along with this, representatives of seven organizations pointed out that labor-management relationship risks are also hindering the development of the automobile industry.

The representatives appealed that due to the global semiconductor supply shortage, the production volume of major finished car companies has decreased by up to 28% compared to before the COVID-19 pandemic, and that raw material price increases, such as the price of Chinese magnesium rising from 20,000 yuan in August to 63,000 yuan at the end of September, have compounded the difficulties of the parts industry. They added that the Shanghai Containerized Freight Index surged to 4647.6 last month, increasing logistics cost burdens, and that securing resources is also challenging due to increased demand for rare earths and rare metals amid the transition to future cars.

On this day, the organization representatives delivered five requests to Prime Minister Kim: ▲expansion of financial support for automobile parts companies ▲reduction of fiscal burdens such as corporate tax ▲extension of automobile tax support ▲alleviation of labor cost burdens and enhancement of labor flexibility ▲preparation of support policies for the transition to future cars.

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