The Rise Of The South Korean Motor Industry

January 24th, 2023

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When I was a child, I hardly ever saw a car made in South Korea. Japanese cars, yes. They were everywhere. But cars from South Korea, no. However, after about 2000, I started seeing them everywhere. What was behind the big upsurge? Was it simply the case that I didn’t notice them on the roads, or was it that they weren’t around?

It’s certainly the case that today, South Korean cars are among the most popular best sellers on the roads. And it’s certainly true that the South Korean motor industry has absolutely mushroomed of the past 50-60 years. In fact, this is true of many industries in South Korea. Back in the 1950s, Korea had barely any heavy industry going. Today, it’s a work leader in a number of fields, including the automotive industry.

Before we go any further, quick note: to ensure that this article doesn’t fall into the TL/DR category, we’ll refer to “Korea” from here on out instead of South Korea. North and South Korea went their separate ways in 1953 at the end of the Korean Civil War, which was when the Korean motor industry got started. Given North Korea’s political stance, we don’t hear much about their cars…

Not that politics have nothing to do with the Korean motor industry. According to one historian on the topic, the Korean government played a long-term game, creating policies and strategies that guided not just the motor industry but other industry sectors (e.g., ship building) across the years.

From Zero To Hero In A Few Decades

The Korean motor industry got started in 1953 when the US military forces on bases in the South needed more spare parts for their Jeeps. They sent up a local assembly plant with the Jeep name to make these spare parts. The owners of the company also had the bright idea of using old oil drums left behind by the army to make the chassis for their own vehicles, known as the Sibal, which were very popular as taxis. And that’s where the Korean motor industry got started.

After the success of the factory for spare parts for Jeeps, other companies started looking at Korea as a location for production lines and factories – and Jeep kept on going. These were often owned by US and Japanese car companies. This went on until 1962, when the Korean government made a law meaning that foreign companies were only allowed to set up joint ventures that local automotive companies had a share in.

During this period, a surprising number of vehicles that we think of as Japanese or American were actually put together in Korea. Mazda, Nissan, Fiat and Ford were just some of them. In fact, Kia started off as an assembly plant for Mazdas, whereas Hyundai was originally a factory for producing Ford Cortinas.

However, the joint venture model wasn’t enough for the Korean government, as they wanted to stimulate the local economy and industry, and reduce the dependence on foreign companies. In 1973, they therefore switched to focus cars that were not just manufactured in Korea but developed there as well. Some of the companies began the process of developing their own products. To do this, they often copied what they had seen during the process of putting other vehicles together, with a few wee tweaks to make them unique. This often involved using licensed parts from companies outside Korea to ensure a good quality product before the final shift to coming up with their own innovations. And things took off from there!

Hyundai – A Case Study

Hyundai is a typical example of a Korean car company that went through all the stages of imitation and innovation. This company started in the late 1960s as an assembly line for the Ford Cortina. When the Korean government called for locally designed cars in the 1970s, they got licences from other companies for various technologies and developed a locally designed car, the Pony. This was followed by the Excel in 1980. Both of these used tech licensed by Mitsubishi. Because the Excel and Pony sold so well and competed with Mitsubishi, the Japanese company didn’t renew the license for any new tech. Wanting to develop further, Hyundai grabbed technological licenses from a number of different companies just in case, and also set up a training consultancy, where trainee developers headed over to Italy to learn the principles of top car design. After 18 months in Italy, these trainees came back to Korea primed with their new knowledge.

What they (and trainees from other Korean companies such as Kia and Daewoo) had learned worked well. In 1993, the Elantra was Australia’s best-selling vehicle. After Kia and Hyundai joined forces, sales of Korean cars grew even more, until, in 2010, the Sonata and Elantra got onto the list of 10 ton best sellers worldwide. In 2013, Hyundai earned more from car sales than BMW, Honda and Peugeot. In short, the Korean motor industry is a force to be reckoned with, and Korea is certainly one of the countries you should think of when you think of places where cars are made.

You may very easily have driven or owned a Korean car at some point; although I haven’t done so personally, various friends and family members have, and they found them to be sound, reliable and good to drive.

Where To (Or From) Next?

Korean cars may be here to stay, but one has to wonder who’s next? Where will our cars come from in the future? We’ve already seen a few of the Chinese players (LDV, Great Wall and its subsidiary, Haval) enter the Australian market – will we see some of the others? Geely already owns Volvo, so will we see more actual Geely vehicles? India’s another possibility, with a few Tatas and Mahindras already hitting Australian roads. Other Asian countries currently have factories assembling vehicles for other countries, so will Thailand, Vietnam and Malaysia take the same route as Korea has done? What about countries from beyond Asia – are we going to drive vehicles from Brazil’s Effa or Uganda’s Kiira? Given the trend towards EVs and the fact that much of the world’s lithium for car batteries comes from African nations, I won’t be the least bit surprised if African vehicles started appearing on the market around the world in the next decade or so.