Tercera Parte Sobre la Comunidad de los Maestros de Inglés

M otors in 1992. Even car engines have been developed by Hyundai M otor and Kia Motor, beginning in 1990 and 1992, respectively.

4.3.2 Production

When car production began in the 1960s, with technical assistance from foreign partners such as Japanese, American, and European car manufacturers, output increased only gradually. In the 1970s, most car manufacturers increased their facility investments for mass production in accordance with the government’s promotion. The annual production capacity of car plants increased from 70,000 units in 1974 to 280,000 units in 1979 (Lee, 1995, p. 197). During the mid-1970s, domestic demand expanded due to a reduction in oil prices and car taxes, and car exports started. As a result, production of cars increased from 13,668 units in 1970 to over 100,000 in 1979 (KAMA, 1995, p.

22).

Despite the oil crisis, the world-wide economic depression and the government’s unfavourable policies towards the car industry in 1979 and early 1980, the production of cars continued to grow. Although the car industry was originally promoted to increase exports, the domestic sales of cars have contributed to the overall growth in production. Increased incomes and radical changes in the taxation of the industry boosted domestic sales in the 1980s, and with the government’s protection of the domestic market with high tariffs8 on imported cars, local car producers have remained dominant in the domestic market. Despite the fact that from 1986 to 1988 car manufacturers enjoyed rapid production growth, with increases in exports accounting for more than 60 per cent of total production, exports fell dramatically in 1989 (see Table 4.7). However, during

the 1990s the growth of domestic sales has more than offset the fall in exports and lifted overall production.

The heavy dependence of the car manufacturers on the domestic market can be explained in two ways. First, since the domestic car manufacturer intended to export their products under their own brand names, lack of brand recognition, compared with the major global producers which have a history of car production for almost a century (except the Japanese), has persisted. It was, therefore, easier to sell cars to the domestic than to foreign customers with ‘unknown’ products. Second, the domestic market was highly protected for the domestic producers. They did not have to make an effort to increase ‘the competitiveness’ of their products because the domestic market was less competitive, compared with the open world market. In addition, the domestic car producers were well aware of the needs and preferences of the domestic customers.

Table 4.7 Proportion of Car Exports and Domestic Sales, 1980-96

Year % E/P % D/P Total Production

1980 20 80 57,225 1981 25 75 68,760 1982 16 84 94,460 1983 14 86 121,987 1984 32 68 158,503 1985 45 55 264,458 1986 65 35 457,383 1987 68 32 793,125 1988 65 35 872,074 1989 40 60 871,898 1990 34 66 986,751 1991 33 67 1,158,245 1992 33 67 1,306,752 1993 35 65 1,592,669 1994 36 64 1,758,213 1995 43 57 2,003,146 1996 46 54 2,239,497

Notes: Figures include sport-utility vehicles. The proportion of export and domestic sales in the table are round

figures. % E/P: % Export/ Production, % D/P: % Domestic sales/ Production

In the 1990s dom estic sales have grown to take a larger share o f total production than those o f exports, but currently grow th seems to be sluggish (see Figure 4.4). The previously huge grow th rate o f domestic sales declined to less than 1 p e r cent in 1995, but dom estic sales still have room to grow despite the limitations o f the dom estic m arket and current econom ic slump. Car ownership in South K orea is low er than that of countries that have similar income levels (see Table 4.8), with South K o re a having only a pproxim ately ju st over 50 per cent of the ow nership found in these countries.

F igure 4.4 The G row th R ate of E x p o rt and Domestic Sales of South K orean C ars, 1986-95

160 t 140 ’ 120 - 100 - 80 - 60 - 40 20 j 0 -2 0- -40 1 % Growth rate

Source: K A M A 1995 and Motor Business International 2nd quarter, 1996

Table 4.8 C om parison of C ar O w nership in U pper-M iddle-Incom e C ountries

Country GD P per capita

in 1995

A utom obiles per 1000 inhabitants Argentina 8,030 133.3 Greece 8,210 181.8 South Korea 9,700 99 Portugal 9,740 208.3 Spain 13,580 344.8 New Zealand 14,340 476.2 i 87 88 90 91 92 93 94 96 -♦— Export D om estic S ale Year

Among the three car manufacturers9, Hyundai M otor has taken a majority share, with an average of over 60 per cent of total production since 1985 (KAMA, 1995, pp. 30-1). Kia M otors used to be the second largest producer, overtaking the production of Daewoo M otor in 1989. By 1994, Kia Motors had 24.9 per cent of total production, while Daewoo M otor’s share had fallen to 18.9 per cent in 1994. However, Daewoo M otor has regained its position as the second largest car manufacturer from 1995. The share of Daewoo M otor’s production increased from 25.1 per cent of total production in 1995 to 27.2 per cent in 1996, and Kia accounted for 22.8 per cent in 1995 and 23.0 per cent in 1996 (EIU M otor Business Asia-Pacific, 2nd quarter 1997, pp. 14-15).

With regard to domestic market share, Hyundai M otor has led the domestic market since the development of the car industry. Its market share, on average, accounted for more than 60 per cent of the total domestic market share until the 1980s. Since then, its share has decreased gradually, but still accounts for over half of total domestic sales. Kia Motors has taken second place in domestic sales after Hyundai M otor (except for 1994), while Daewoo M otor has been the worst performer in domestic sales (KAMA, 1995, p. 42).

Currently, all three car producers recently revealed plans for future expansion of production capacity in order to be one of the top 10 biggest car manufacturers in the world through achieving ambitious export targets (see Table 4.9). Hyundai M otor was the thirteenth biggest motor vehicle manufacturer in the world in 1994. Kia M otors and Daewoo M otor were the seventeenth and the twenty-third biggest world motor vehicle producers respectively in that year (see Table 4. 10).

9 Ssangyoung has only produced sport - utility vehicles (4WD), which are included as passenger cars in