What Is the Development Formulation of Korea's Automotive Industry?

Khodrocar – Korea entered the auto industry later than Europe, therefore they are followers, not leaders. Followers suffer from lack of resources and their goal is to achieve the position of a leader. The only strength of Koreas automotive industry compared to others, is the cheap work force that lowers the price of final products.
One of the most important feature of a country like Korean in automotive industry is the use of modern options in their vehicles. That was the reason for their boom in automotive industry’s development during 10 years.

Formulation of Progress
Korea strengthened its weakness points in a way that it is not dependent to any country anymore. This process is not some kind of magic or even a miracle. It is just a matter of knowledge, ability and good targeting.

1- Raw Materials
One of the important reason for the alliance of Kia and Hyundai was to use domestic raw materials. Hence, this group has established a Hyundai steel plant and other specialized automotive parts production departments so it can supply raw materials by internal resources.

2- Technology and Innovation
Domestic raw materials decreased the costs and the Korean invested more money in R&D. That's the reason why the fund of R&D department raised from 160 million dollars in 1990 to 2 billion dollars in 2008. This investment has led to the technologies like "Blue Drive”, HEVs and PHEVs, FEVs and Bio Fuel cars. Interestingly, the group did not have any plans for producing hybrid and fuel cell vehicles until 1995 and 1998, while the Germans had been investing in these cars years before them.

3- Development of New Products
In order to supply the huge demand of customers, Hyundai - Kia updated its production lines. Then Hyundai decided to present seven new face lift models just in 24 months but Kia decided to produce environment friendly and low consumption cars for third world countries.

This plan was implemented in the year 2010 and has led to the birth of new world-class Hyundai-Kia cars, Genesis brand, Kia Stinger and hybrid vehicles. Their development plan costs 338 million dollars.

4- Production
Kia-Hyundai has worked hard to maintain its production lines in major markets such as the United States and Korea and built production lines in countries like India, Slovakia, Czech Republic, Brazil and Turkey, where they have cheap work forces. This reduced the final price and transportation prices.

5- Marketing and Sale
Hyundai removed bad imaginations about its products and regained its lost credit. Marketing sector of this sector was very active maximize the ability to promote its up-to-dated products. The result was that this brand, after entering the US market in 2005, was able to achieve a better position every year in the ranking of the best global brands. Hyundai was also selected as the market's top non-luxury brand in its early qualification review, according to a JD Power survey in United States.

6- Organization Structures
Kia-Hyundai can adapt themselves with every new situation in the market. According to the Director of Hyundai in United States the structure of the company’s human resources and less paperwork allows this company to be able to adapt themselves with new situations. Kia-Hyundai is well known for having big dreams without a pre-organized plan and these days they are compared with Toyota.

Khodrocar - Perhaps the biggest weakness of the Hyundai-Kia is the accumulated loss and debt that affects brand image in the global community. However, from customers’ point of view, the outcome and productions of a company is important which they are one of the best. It is expected that during the next 5 to 10 years, the Korean brand will be placed beside American, Japanese and European famous brands.


Khodrocar Reporter: Mostafa Anisi
Khodrocar Translator: Maziyar Jafarieh