According to media reports on March 10, the Korea Automobile Manufacturers Association (KAMA) announced that South Korea's automobile production in 2024 fell by 2.7% year-on-year to approximately 4.13 million units, down from 4.24 million units in 2023. This decline caused South Korea to drop from sixth to seventh place among global automobile-producing countries, marking its lowest ranking since 2019.
KAMA's report pointed out that the primary reasons for the decline in automobile production in 2024 were economic slowdown and weak domestic consumer demand in South Korea. Additionally, the dual pressures of high inflation and high interest rates significantly affected consumers' willingness to purchase vehicles, further dampening the domestic automotive market.
A KAMA official stated in a phone interview, "Weak domestic demand in South Korea, coupled with the possibility of the U.S. imposing higher tariffs on imported cars, will continue to put pressure on local automobile production." He urged the South Korean government to provide more tax incentives to automakers to support the domestic production and investment in next-generation vehicles, thereby minimizing the impact of declining domestic production on related industries.
Globally, the top four countries in automobile production in 2024 were China, the United States, Japan, and India, with production volumes of 31.28 million, 10.56 million, 8.23 million, and 6.01 million units, respectively. Notably, global automobile production in 2024 reached 93.95 million units, a 0.5% year-on-year decrease, marking the first annual decline since the COVID-19 pandemic led to a 15.4% drop in global automobile production in 2020.
During the pandemic in 2020, South Korea briefly rose to the fifth-largest automobile producer in the world due to global supply chain disruptions. However, as Germany's auto industry recovered, South Korea fell to sixth place in 2022. In 2024, Mexico surpassed South Korea with a production volume of 4.2 million units, further pushing South Korea down the rankings.
In 2011, South Korea's domestic automobile production reached a record high of 4.66 million units, with exports peaking at 3.15 million units. However, as South Korean automakers accelerated overseas expansion, domestic production gradually declined. By 2024, South Korea's automobile exports had dropped to 2.78 million units.
Currently, South Korean automakers are continuing to expand their overseas production capacity. Hyundai's Czech plant increased its annual capacity from 230,000 units in 2011 to 330,000 units; Hyundai's India plant expanded from 600,000 to 750,000 units; and Hyundai's Turkey plant doubled its capacity to 220,000 units. Kia has also expanded production at its plants in Slovakia and Georgia (USA), while its factories in Mexico and India have a combined annual production capacity of nearly 800,000 units. Notably, Hyundai's new plant in Georgia, USA, began operations in October 2024 with an annual capacity of 300,000 units, further raising concerns about the future of domestic automobile production in South Korea.
South Korea's auto industry is also facing pressure from potential U.S. import tariffs, which are expected to hit South Korean car exports and further weaken domestic production. Industry analysts warn that if automakers continue shifting production overseas while facing increasing competition from China, South Korea may struggle to maintain its position among the world's top ten automobile-producing nations.
General Motors Korea exports 95% of its vehicle production, making it particularly vulnerable to U.S. trade policies. In 2024, the company produced nearly 500,000 vehicles, primarily small cars for GM. However, analysts warn that new tariff policies under a potential Trump administration could have a significant impact on its operations.
High labor costs and South Korea's 52-hour workweek policy have also posed challenges for the country's auto industry. Lee Hang-gu, a researcher at the Korea Automotive Technology Institute, noted, "In the short term, tariffs will add extra pressure on automakers, while in the long term, China's growing influence in developed markets like the EU will further impact South Korea's domestic production. If South Korea continues expanding its overseas production capacity, domestic small parts suppliers reliant on local manufacturing could face serious risks."
