Government to Provide 403 Billion Won in Financial Support for Auto Parts Companies Transitioning to Future Vehicles

Interest Subsidy Program to Promote Transition to Eco-Friendly Vehicles
Interest Support for Facility, R&D, and M&A Loans for Up to Eight Years
"Each 100 Million Won in Support Induces 226 Million Won in Investment"

Yonhap News Agency

The government is planning to provide a total of 403 billion won in financial support to small and medium-sized, as well as mid-sized, auto parts companies investing in the transition to future vehicles.

The Ministry of Trade, Industry and Energy announced on March 26 that it has released the 2026 support plan for the “Interest Subsidy for Eco-Friendly Vehicle Transition” program and will accept applications until April 27.

This program provides interest subsidies on loans needed for facility investment, mergers and acquisitions (M&A), and research and development (R&D) related to the production of future vehicle parts.

Eligible companies can receive loans of up to 10 billion won each. For small companies, the program will support up to 2 percentage points of the loan interest rate, and for mid-sized companies, up to 1.5 percentage points, for a maximum period of eight years.

Eligible companies are defined as future vehicle parts companies under the Future Vehicle Parts Industry Act, including those producing parts for eco-friendly vehicles such as electric vehicles and hydrogen vehicles.

This year, a total of 403 billion won in corporate loans is planned for support. Applicants must first obtain a recommendation letter from the Korea Institute for Advancement of Technology (KIAT), the designated agency, and then undergo a bank review to receive the loan.

Since the program began in 2022, a total of 330.5 billion won has been provided to 79 companies as of last year. By category, facility investment accounted for the largest portion with 264.6 billion won (55 companies), followed by R&D with 58.9 billion won (23 companies), and M&A with 7 billion won (1 company). Notably, according to data compiled since 2025, every 100 million won of government-supported loans has induced an average of 226 million won in corporate self-investment.

A ministry official stated, "This initiative is intended to ease the financial burden on parts companies transitioning to future vehicles and to enhance their competitiveness. We expect it will serve as a catalyst to accelerate the transformation of the industrial structure toward eco-friendly vehicles such as electric vehicles."

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