[2022 National Audit] Hyundai Rotem Responds to Concerns Over KTX Projects from Incheon and Suwon: "Committed to Best Train Delivery"

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[Asia Economy Reporter Moon Chaeseok] Hyundai Rotem announced on the 11th that it will do its best to deliver Korean-made high-speed trains to enhance public convenience, following criticism at the National Assembly audit regarding delays in train deliveries and the postponement of the KTX opening from Incheon and Suwon.

Earlier, Heo Jong-sik, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, pointed out that Hyundai Rotem did not participate in the bid for 16 high-speed KTX train cars ordered by Korail last year for the Incheon and Suwon routes, causing setbacks in the KTX opening project. Hyundai Rotem, the only domestic high-speed train manufacturer, reportedly did not participate in the bid due to the small number of trains and low prices.

Hyundai Rotem expressed regret for causing concern to the citizens of Incheon and explained that "high-speed vehicles are custom-made products whose production costs vary significantly depending on the purchase quantity."

Custom-made products are not mass-produced with the same specifications like general industrial products but are produced in limited quantities with different specifications and designs tailored to the customer's needs. High-speed vehicles are custom-made products assembled and manufactured by purchasing everything from raw materials to over 12,000 parts from partner companies.

Hyundai Rotem emphasized, "According to the Railroad Safety Act, we pay fees for testing and inspection from raw materials to finished products every time," adding, "If economies of scale are not achieved, the production cost structure rises sharply."

To reduce costs and meet the expected unit price desired by the ordering party, Hyundai Rotem requested Korail last year to place a combined order for 16 cars for the Incheon and Suwon routes and 120 cars for the Pyeongtaek-Osong line. In July, Korail issued a preliminary specification disclosure stating that it would proceed with a combined order of 136 cars, including 16 cars for the Suwon-Incheon route and 120 cars for the Pyeongtaek-Osong line.

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