Theautomotive industry in South Korea is thefifth-largest in the world as measured by automobile unit production and also the five-largest by automobile export volume.
While its initial operations were merely the assembling of parts imported from foreign companies,South Korea is today among the most advancedautomobile-producing countries in the world. Annual domestic output first exceeded one million units in 1988. In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signalling its coming of age.
The history of the Korean automotive industry began in August 1955, when Choi Mu-seong, a Korean businessman, and two of his brothers (Choi Hae-seong and Choi Soon-seong), mounted a modified and localized jeepengine on a US military jeep-style car body made with the sheet metal from a junk oil drum can and military junkJeep parts to manufacture its first car, called theSibal (car). Sibal translates as anew go or a new start.
To develop the automobile industry, theKorean government announced an "Automobile Industry Promotion Policy" in 1962, and The Automobile Industry Protection Act to protect the infant industry. Foreignautomakers were barred from operating in Korea, except in joint ventures with local business entities. The government's efforts led to companies that were established in other businesses entering the industry, and the formation of new startups. Three companies were established in 1962: Kyeongseong Precision Industry, which changed its name to "Kia Industry", and started assembling cars in cooperation withMazda in 1962; Dongbang Automobiles, which was merged with Ha Dong-hwan Workshop and became Ha Dong-hwan Automobile Industry Co. (the predecessor ofSsangYong Motor Company) in 1963; andSaenara Automobile, established with the technical cooperation ofNissan; it was the first automaker in Korea that was equipped with modern assembly facilities, and acquired byShinjin Industries in 1965.Asia Motors was established in 1965, and theHyundai Motor Company was established in 1968 with the technical cooperation ofFord. However, all these companies were then merely automotive assemblers, importing parts from overseas partners.
In 1970, Toyota began to show hesitation in continuing its relationship with Shinjin Automobiles. After Toyota's withdrawal in 1972, Shinjin entered into a joint venture withGeneral Motors and formed General Motors Korea, which was renamed Saehan Motors in 1976. Kia opened itsSohari Plant in 1973 inGwangmyeong, South Korea.
TheHyundai Pony, the first Korean-developed automobile, was built in 1975. Hyundai Motors accomplished this by engagingGeorge Turnbull ofBritish Leyland Motor Corporation as vice-president. The final result was a collaborative effort, comprising:
Hyundai chalked up another first when it exported the Pony to South America, in countries like Colombia, Venezuela and Ecuador between 1976 and 1982, making it the first Korean-developed car to be exported. In 1977, Motores Tecno in Costa Rica, became the first Hyundai distributor in Central America, where the Hyundai Pony pickup were sold.
In 1982, theDaewoo Group gained control of Saehan Motors, and changed its name toDaewoo Motors in 1983. However, the Korean automobile industry suffered greatly from the1979 energy crisis, and the consequent localrecession. The government took action to resolve this difficult situation in 1982 by implementing the "Automobile Industry Rationalization Policy", the objective of which was to prevent excessive competition between the four major domestic automakers: Hyundai Motors, Kia Industry, General Motors Korea, and Asia Motors. Additionally, the government postponed its import liberalization of automobiles.
Shinjin Jeep Motors, which was a subsidiary of Shinjin Motors, changed its name to Geohwa Co. in 1981, and was taken over by Dong-A Motor Co. (formerly Ha Dong-hwan Automobile Industry Co.) in 1985. In 1986, the company was renamed the SsangYong Motor Company.
While localization of auto parts was the major concern during the 1970s, developingmass production system for the export-oriented industry became the issue during the 1980s. Hyundai entered the United States market in 1986 with theExcel (as the Pony was known there), and set a record for selling the most automobiles in its first year of business in the United States compared with any other car brand – 126,000 vehicles.Fortune magazine nominated the Excel for the "Best Product 10" award, largely because of its low price. However, the cars were of low quality and often broke down. This led to Hyundai having a poor reputation in the United States. With this initial success in the export market, the company began in 1989 to produce models, designed in-house and manufactured with its own technology, starting with theSonata, a medium-sizedsedan. The Sonata, nevertheless, still featured many Mitsubishi designs and parts.
Hyundai's cumulative exports to the U.S. exceeded one million in 1990. In 1992 its ScoupeTurbo won at thePikes Peak Hill ClimbRally, and in 1993 itsElantra was selected as the "Best Car of 1993" in Australia. Hyundai'sAccent earned Canadian Best Buy Award in 1995, and itsAvante also won theAsia-Pacific Rally that year. Yet, amidst all the successes, trouble was brewing for Hyundai. However this was not it.
The Excel, although initially well received, gave Hyundai a bad image, as over time its faults became apparent. Also, in efforts to bring the costs down, its quality and reliability suffered. As time caught up with the poor reputation of Hyundai in the United States, sales dropped drastically, andcar dealerships started abandoning theirfranchises.
Rather than drop out of the world's largest automotive market, Hyundai began investing heavily in the quality, design, manufacturing, and long-term research of its vehicles in 1998, and added a ten-year or 100,000-milewarranty to its vehicles in the United States. This effort paid dividends for Hyundai, and in 2004 the company tied withHonda for initial brand quality, second in the industry behind Toyota, in a survey conducted byJ.D. Power and Associates.
Towards the end of the 20th century, however, the industry began to face tremendous pressures at home, with the domestic market growing at under five percent, and greater competition, both locally and abroad. With energy waste, air pollution, andtraffic congestion becoming more chronic, the Korean government has imposed the heaviestvehicle excise duty on automobiles and gasoline among the major automobile-producing countries. In 1985, the number of vehicles registered in Korea was one million, but by 1995 the total had increased to eight million. In response to these pressures, Korean automakers have become more aggressive in terms of pricing and quality, and begun developing larger cars, and broadening their product ranges to meet diverse customer preferences.
Internal pressures at home have also forced Korean automobile manufacturers to venture aggressively intointernational markets. In the early 1990s, Daewoo Motors also began to expand heavily throughout the world. Until 1996, its cars were all based on General Motors' models. After theAsian financial crisis that started in 1997, it took over the troubledSUV specialist, SsangYong, in 1998, but ran into financial trouble in 1999.
Asia Motors was completely merged withKia (the new name for Kia Industry, changed in 1990) in 1999. Kia Motors had financial trouble in 1997, and helped push South Korea into the Asian financial crisis. Kia was subsequently acquired by Hyundai Motors in 1998.
Samsung's entry into the automobile industry was also ill-fated. Established in 1994,Samsung Motors, its car manufacture. started selling cars in 1998, just when South Korea was hit by the Asian financial crisis. Faced with financial difficulties, Samsung sold a seventy percent stake in the company toRenault in September 2000, and it was renamedRenault Samsung Motors. Samsung also ventured into the heavy vehicle market, foundingSamsung Commercial Vehicles in 1996,[1][2][3][4] although this second company filed for bankruptcy in 2000,[4][5][6][7] ending the liquidation in 2002.[2]
The purchase ofDaewoo Motors byGeneral Motors Corporation in 2002, and Hyundai's completion of a onebillion dollarassembly plant inAlabama in 2005, are two major developments that will further drive the Korean automobile industry to focus on North America, its largest export market. The move to the U.S. makes Hyundai the sixth Asian automaker to build a U.S. factory, the third foreign maker to pick Alabama, and the sixth automaker to locate in the Southeastern United States since 1990. Now opening in 2009 is another U.S. factory that will be a twin to the Alabama factory. It is located in West Point, Ga and will build KIA cars.
As the world leader in rechargeable battery production, South Korean manufacturers rely on imports for more than 60% of battery material, most of which comes from China. This leaves South Korea vulnerable to trade tensions and geopolitical shocks with China and other countries in the region.[8]
1955: Choi Mu-seong, a Korean businessman and two of his brothers mounted an engine on a modified US Army Jeep body and chassis to manufacture the historic model, called "Sibal";
Shinjin Industrial founded[9] (precursor of Daewoo Motor);
1975: Government established "Systematization Promotion Act" for medium and small enterprises in automobile industry;
Hyundai Motor Co. established its own research institute, and produced Hyundai Pony, the first Korean-developed car, designed by ItalDesign and based on Mitsubishi technology. The car is imported to Britain, where Korean cars have never been sold before.;
GM Korea's Camina launched, based on theHolden Torana.
1976: Hyundai Motor made Korean history by exporting the "Pony" to the Republic of Ecuador;
Kia Industry took over Asia Motors Co.;
GM Korea changed its name to Saehan Automobiles,[11] and produced Saehan Gemini (based onOpel Kadett andIsuzu Gemini models), and Saehan Elf (based onIsuzu Elf);
Hyundai truck launched, based on aMitsubishi Fuso model; Hyundai HD1000, and Hyundai Vison also launched.
1977: Ha Dong-hwan Automobiles changed its name to Dong-A-Motors.
1980: Government announced integration of automobile industry, limiting internal competition and restricting the types of products each company could manufacture.
1981: Sinjin Automobiles changed its company name to Geohwa Company.
1989: Hyundai Motor completed construction of its plant inBromont, Canada;
With the increase in labor cost and a strong currency, coupled with a booming domestic market and outdated products, exports dropped by 40 percent year-on-year;[13]
Hyundai Sonata launched, using in-house design, but still featuring Mitsubishi technology;
1995: Number of vehicles registered in South Korea exceeded eight million;
Hyundai's Accent earned "Canadian Best Buy Award", and also won the "Asia-Pacific" Rally;
First Seoul International Motor Show.
Daewoo begins importing cars to Britain, aided by a revolutionary sales package where cars are sold directly to customers from the manufacturer rather than through a traditional dealer network.
1997: Kia Motors went into financial trouble, and helped push South Korea into the Asian financial crisis.
1998: Hyundai began investing heavily in quality, design, manufacturing, and long-term research, and added a 10-year or 100,000-mile warranty to its vehicles in the United States;
Samsung Motors started selling cars;
51% of Kia Motors acquired by Hyundai Motor;
Daewoo Motors took over the troubled SUV specialist, SsangYong
1999: Asia Motors completely merged with Kia Motors Company.
2023: Ssangyong was changed as KG Mobility (KGM), due to KG Group from South Korea acquired it. And they also acquired former Edison Motors and changed its name 'KGM Commercial'
2024: Renault Korea Motors was changed asRenault Korea and changed its logo to the Renault’s lasagne logo. Also, change the model name and started to increase the proportion of imported cars.
Most importers and distributors of foreign automotive marques in the South Korean market are members of theKorea Automobile Importers & Distributors Association (KAIDA). As of 2025, marques represented by the members of KAIDA are the following:
^"History". Samsung.Archived from the original on 2 July 2012. Retrieved19 March 2013.
^ab삼성상용차 24일 파산 신청 [Samsung Commercial Vehicles for bankruptcy in 24 days].article.joins.com (in Korean).JoongAng Ilbo. 23 February 2002. Retrieved24 August 2013.
^Lee, Kong-Rae (2013). "Technological Catching-Up through Overseas Direct investment: Samsung's Camera Business". In Sachwald, Frédérique (ed.).Going Multinational: The Korean Experience of Direct Investment. Studies in global competition.Routledge.ISBN978-0-415-27051-9.
^ab<기업구조조정> 삼성상용차, 자산은 매각·인력은 계열사 수용 ["Corporate restructuring:" Samsung commercial vehicles, sale of assets and personnel transfer to subsidiaries] (in Korean). Labortoday.com. 3 November 2000. Retrieved20 March 2013.
^대구 옛 삼성상용차터에 간판 기업들 잇단 입주 [Samsung agrees to move companies on the old Busan's Samsung Commercial Vehicles' lot].hankooki.com (in Korean). 15 November 2009. Archived fromthe original on 1 November 2013. Retrieved24 August 2013.
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