Parts Industry "Urgent Transition to Future Cars"... Korea Automotive Technology Institute Submits Proposal to Government

Collected Opinions from 24 Partner Companies
Delivered to Ministry of Trade, Ministry of Economy and Finance, and Ministry of SMEs and Startups

Jeong Manki, Chairman of the Korea Automobile Manufacturers Association / Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kiho Sung] The Korea Automobile Industry Association (KAIA) recently held three meetings with parts suppliers and prepared a proposal to the government to resolve difficulties faced by automobile parts companies, which was delivered to the government on the 3rd.

At these meetings, nine organizations affiliated with KAIA and 24 partner companies participated. The companies expressed that “Initially, we expected production recovery last year, but due to the prolonged semiconductor shortage following COVID-19, the recovery of finished vehicle production has been delayed, intensifying difficulties for parts suppliers,” emphasizing the urgent need for support.

This concern is also confirmed by figures. According to the consolidated financial statements of 82 listed companies with December fiscal year-end registered in electronic disclosure by the Korea Automobile Manufacturers Association (large companies include Mando, KCC Glass, Hyundai Wia), the number of companies operating at a loss increased from 18 in the first quarter of last year to 35 in the third quarter.

During the three meetings, parts companies cited difficulties such as ▲extreme labor shortages ▲increase in workers holding '2 jobs, 3 jobs' due to the implementation of the 52-hour workweek ▲rise in Omicron variant cases ▲stricter loan requirements from financial institutions ▲financial sector’s aversion to internal combustion engine vehicles ▲difficulty for small and medium parts companies to transition to future vehicles ▲difficulty securing ships and increased fuel costs leading to significantly higher logistics expenses.

To alleviate these difficulties in the automobile parts industry, KAIA proposed to the Ministry of Trade, Industry and Energy, Ministry of Economy and Finance, Ministry of SMEs and Startups, Ministry of Employment and Labor, and Financial Services Commission measures including ▲supplementing the 52-hour workweek system ▲improving the foreign worker system ▲easing self-quarantine for COVID-19 positive cases ▲expanding liquidity support for parts companies ▲supporting logistics in the automobile industry ▲strengthening support for the transition to future vehicles.

Jung Manki, Chairman of KAIA, stated, “In addition to the burdens of transitioning to future vehicles, difficulties in securing semiconductors, application of the 52-hour workweek, enforcement of the Serious Accident Punishment Act, and challenges in securing foreign workers, the recent prolonged Russia-Ukraine conflict has further worsened the situation, leading parts companies to seriously consider overseas investment and raising concerns about survival domestically.” He added, “Although it is the end of the government’s term, it is necessary for the government to listen more closely to voices from the field and promptly prepare effective measures considering these circumstances.”

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