"Shortage of Auto Parts Suppliers for Future Cars... Government Policy Support Needed"

Seminar Hosted by the Automobile Parts Industry Promotion Foundation

(Photo by Asia Economy)

[Asia Economy Reporter Kiho Sung] There are concerns that the domestic automotive parts industry is not adequately prepared for the transition to the future car era. It is argued that both the industry's own efforts and government policy support must go hand in hand.

On the 13th, Jeon Jong-geun, president of the Korea Automotive Industry Association (and professor at Hankuk University of Foreign Studies), presented the results of interviews with 10 automotive parts companies and a survey of 281 companies at the '2022 Autumn Automotive Parts Industry Development Strategy Seminar' hosted by the Korea Automotive Parts Industry Promotion Foundation (KAP) held at The-K Seoul Hotel in Seocho-gu, Seoul.

President Jeon stated that despite some improvement in business conditions this year, such as a slight increase in sales compared to the previous year, 24.8% of first-tier suppliers and 22.4% of second-tier suppliers recorded operating losses. The survey found that companies are struggling due to increased costs in raw materials, logistics, and labor, as well as decreased sales and profits.

Half of the parts companies responded that their preparation for future car adaptation was insufficient or very delayed, revealing that the parts industry's response to the future car transition is challenging.

President Jeon advised, "To successfully achieve the transition to future cars, companies must have their own technological capabilities and cash cow businesses as basic conditions, and strive to integrate new technologies such as materials, electrical/electronics, and software."

However, he pointed out that there are limits to the parts companies' efforts alone in the future car transition, so the government needs to establish policies to strengthen the future competitiveness of parts companies and support the establishment of future car cooperation networks. He also emphasized that the industry must actively pursue technology acquisition, diversify customers, and innovate management.

Oh Won-seok, director of KAP, said, "Especially at times like these, we must respond to internal and external environmental changes through technology development, quality and productivity improvement, cost awareness enhancement, and cost reduction, while also striving to develop overseas markets, expand future car research and development (R&D) investment, and nurture talent to enhance the competitiveness of the parts industry."

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