Even Behind Mexico... Domestic Car Production Ranks 7th Globally

Domestic Automobile Production Down 2.7% Last Year
South Korea Drops from 6th to 7th in Global Ranking
Exports Rise, but Weak Domestic Demand Persists

Last year, South Korea's global ranking in domestic automobile production dropped one place from 6th to 7th due to sluggish domestic demand.

On the 9th, the Korea Automobile Mobility Industry Association (KAMA) revealed this in its report titled "2024 Global Automobile Production Status and Implications." Looking at the global automobile production rankings by country, China ranked 1st, the United States 2nd, Japan 3rd, and India 4th, maintaining their positions as the top four automobile producers for four consecutive years. Germany ranked 5th, while Mexico surpassed South Korea to take 6th place.

Domestic automobile production saw exports increase by 0.6% to 2.78 million units, but total production declined by 2.7% year-on-year to 4.13 million units due to weak domestic demand. The report stated that global automobile production last year totaled 93.95 million units, a 0.5% decrease from the previous year. This marked the first decline since the 15.4% plunge during the COVID-19 pandemic in 2020.

On the 13th of last month, export cars were waiting to be loaded at Pyeongtaek Port, Gyeonggi.

The global decline in automobile production was mainly attributed to production slumps in Japan (-8.5%) caused by quality certification fraud issues at some manufacturers such as Toyota and Honda. Production also decreased in countries like Thailand (-20.0%), South Korea (-2.7%), and Spain (-3.0%).

The combined production of China, the United States, Japan, and India accounted for 59.7% of global automobile production. In particular, China maintained its top position for the 16th consecutive year, recording 31.28 million units produced last year, a 3.7% increase year-on-year, driven by government-led domestic demand stimulation and export promotion policies. Although the United States saw an increase in domestic sales (15.96 million units, up 2.2%), production fell by 0.7% to 10.56 million units as manufacturers focused on inventory management.

The report diagnosed that South Korea's automobile industry is facing threats to its industrial base due to internal and external challenges such as limitations in the domestic market and intensified global competition. It noted that the domestic automobile market has limited potential demand, so even if domestic sales recover this year compared to the previous year, the effect on production expansion is expected to be minimal. Additionally, the strengthening of Chinese companies' dominance in the global market and the possibility of U.S. tariff impositions are expected to contribute to export declines.

The association warned that failure to respond promptly to such rapidly changing business environments could risk South Korea losing its position among the global 'Top 10' automobile producing countries due to weakened competitiveness. This could lead to worsening business conditions in the parts industry, reduced employment, and negative impacts across upstream and downstream industries.

A KAMA official suggested, "Under the clear goal of maintaining and expanding domestic production scale, it is necessary to provide extraordinary government-level policy support such as expanding tax benefits for future car production and facility investment, domestic demand stimulation measures to promote the spread of eco-friendly vehicles, and the introduction of a '(tentative name) Domestic Production Promotion Tax System' to encourage and support domestic production, enabling fair competition with advanced global countries."

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