In this blog post, we will look at the beginning and development of the history of the Korean automobile industry and talk about the challenges we will have to face in the future.
What is the most common means of transportation we see around us? Most people would answer that it is a car. Cars are more than just a means of transportation; they are deeply embedded in our lives and culture. However, the history of cars in Korea is not very long. So, how did the history of cars in Korea begin? Let’s find out what cars are in Korea and how they have changed.
The first car in Korea is recorded as a car brought in through the American minister Horace Newton Allen at the 40th anniversary of the enthronement of Emperor Gojong in 1903. However, there is no detailed record of the car, so there are conflicting reports that it was a Ford Model A limousine or a Cadillac. After that, two cars for the imperial family and one car for the Governor-General were introduced in 1911. One of them was a British Daimler limousine for Emperor Gojong, and the other was a US-made Cadillac for Emperor Sunjong. At this time, cars were a luxury item that only a few elites could afford, and were far from the general public.
After that, starting in 1915, wealthy people began to import and ride cars, and it is believed that civilians gradually began to ride cars as well. However, in the early days, owning and driving a car was very rare, especially in an environment where roads were poor and cars had difficulty getting around. After the Japanese colonial period, many cars came into the country and sales and service companies were established, and by 1945, the number of cars in Korea had increased to 7,386.
Even in the difficult economic situation after the Korean War, the demand for automobiles continued to grow. At this time, some automobiles began to be produced in Korea using automobile parts used by the U.S. military, and this movement can be seen as the beginning of the Korean automobile industry. The first domestically produced car in Korea was the Sival, which was made in 1955. The first domestically produced car was a Jeep-type passenger car made by three brothers, Choi Moo-sung, Choi Hae-sung, and Choi Sun-sung, who ran an auto repair shop in Seoul. The three brothers used the engine and transmission of a Jeep they received from the U.S. military to make a car by stretching a drum. The first domestically produced car had a localization rate of 50%, which made the Choi brothers very proud. However, it took four months to build a car and the price was 80,000 won. At the time, 80,000 won was very expensive, equivalent to more than $4,000 in today’s value, so not many people bought the car. Then, in October 1955, Choi Moo-sung exhibited the first car at the Industrial Fair held at Gyeongbokgung Palace to commemorate the 10th anniversary of Korea’s liberation. At this time, the Sibal car was selected as the best product and won the Presidential Award. When this was widely reported in the newspapers, the humble factory, which was a tent at the entrance to Euljiro, was flooded with customers wanting to buy the Sibal car, and as a result, the price rose to 300,000 Hwan overnight. The three brothers earned 100 million won in down payment within a month of receiving the Presidential Award. With this money, the three brothers bought a factory and equipped it with the necessary facilities to begin mass production. However, the government subsidies ended with the 5.16 Revolution, and production was suspended in 1963 due to the pressure from the Saenara automobile, which was released in 1962.
Until the 1970s, most Korean automakers made cars by signing contracts with foreign companies and importing major parts to assemble and produce them in Korea. In 1966, Shin Jin Motors formed a technical partnership with Toyota Motor Corporation of Japan to produce the Corona, Crown, and Publica. In 1967, when the Second Economic Development Plan was launched, South Korea began to implement a policy to foster the heavy and chemical industries. In December of that year, Hyundai Motor Company was established. In 1968, Hyundai Motor Company entered into a technical partnership with Ford to produce the Cortina and Ford 20M. Founded in 1965, Asia Motor produced the Fiat 124 in 1970 through a technical partnership with Fiat. The Fiat 124 of Asia Motor, the Corona of Shingin Motor, and the Cortina of Hyundai Motor formed the first competitive passenger car system in Korea in the early 1970s. In 1962, KIA partnered with Japan’s Toyo Kogyo to launch the three-wheeled K-360 light-duty truck, and in 1963, the T-1500 light-duty truck, ushering in the era of delivery trucks in Korea. This led to the formation of a competitive system of four companies in the Korean automobile industry.
In 1972, Toyota Motor withdrew from Shingin Motor to enter China and instead established GM Korea in a joint venture with GM to mass-produce Chevrolet and Record. In 1967, the Korean government-run Korea Development Bank (KDB) acquired the Korean shares of GM Korea, renamed the company Saehan Motor, and in 1978, KDB transferred its shares to Daewoo Group, which restarted the company under the name Daewoo Motor. Kia Motors launched the Brisa in 1974, a car that was built at a comprehensive automobile factory and succeeded in localizing more than 80% of its engines. In 1975, Hyundai Motors failed to establish a capital partnership with Ford, but then developed the Pony, the first domestically produced car that was 90% localized. The Pony was an affordable car that suited the tastes of Koreans and the conditions of Korean roads, and it was popular with the public for its durability, which led to the era of the “My Car.” After the Pony, the era of compact cars began, pushing out mid-sized cars, which had accounted for about 80% of the passenger car market. The Pony was also the first Korean passenger car to be exported to Ecuador, which helped propel the Korean automobile industry to the next level.
In 1980, Kia Motors launched the Bongo, which targeted the gap between large cars and vans, and it became an instant hit. In 1980, the automobile industry faced a crisis due to rising oil prices caused by the second oil crisis. In 1981, the government implemented measures to rationalize the automobile industry in order to revive it. Due to the rationalization measures for the automobile industry, passenger car production was monopolized by Hyundai and Daewoo. As Kia took over the production of small and medium-sized trucks, the management of each company was normalized. Daewoo dominated the luxury car market and Hyundai dominated the mid- to low-priced market. However, after the lifting of the rationalization measures for the automobile industry in 1986, Hyundai dominated the luxury car market with the Grandeur.
Since then, various cars have been released and have become a popular means of transportation. As a result, Korea has achieved technological independence and advanced its industrial structure after full-scale mass exports to the global market. In 1996, with an annual production capacity of 2.8 million vehicles, Korea emerged as the world’s fifth largest automobile producer. However, the domestic market collapsed due to the IMF crisis in 1997, and a major restructuring of the automobile industry took place. After the restructuring, only Hyundai Motor Company and Kia Motors Corporation survived. GM Daewoo was sold to GM of the United States, and Samsung Motors was acquired by Renault of France. Mahindra, an Indian automobile company, became the largest shareholder of SsangYong Motor Company.
It has been about 100 years since cars were introduced to Korea, and about 40 years since Korea developed, produced, and exported cars on its own. Despite this short history, Korea has achieved a remarkable feat of ranking fifth in the world in terms of the number of cars produced. In recent years, Korea has been trying to upgrade its cars, not only to increase production capacity, but also to become a more competitive car powerhouse in the global automotive market. However, in order to lead the future automotive industry, it is necessary to go beyond simple production volume and take the lead in cutting-edge technology areas such as electric vehicles and autonomous vehicles. In order for the Korean automotive industry to achieve sustainable growth and development in the future, it will be necessary to continue technological innovation and strengthen its competitiveness in the global market.
