The world's auto industry is undergoing a seismic change right now, bringing both crisis and opportunity to Korean carmakers.
It's certain the era of the U.S. Big 3 has all but gone, but who will emerge as the new Big 3 or Big 5 global makers is less certain, as countries such as Japan, Germany and Italy fiercely vie to fill the void.
The Hyundai-Kia Automotive Group has successfully capitalized on the setback of U.S. makers, expanding its share in the world's largest automobile market by 1.8 percentage points to 7.3 percent over the past year. Whether Hyundai-Kia and other Korean carmakers secure a place in the Big 5 group, however, will depend on what they learn from their U.S. competitors' failure.
Korea's auto industry has rapidly grown to be the world's fifth largest under the protection and support of the government, and more recently, thanks to the favorable foreign exchange rates. But both the corporate practices and the government's policy are dangerously close to their U.S. counterparts.
The auto industry union, for instance, is one of the most combative groups, even among the nation's notoriously militant labor activists, while the government is offering tax breaks in accordance with the vehicle sizes, running squarely counter to global trends of favoring lighter, smaller and fuel-efficient models.
Which explains why both the government policymakers and industry executives should turn their attention to the nearest auto giant ― Japan ― in which a small, hybrid car emerged as the best-selling vehicle last month. Japanese frontrunners Toyota and Honda account for 98 percent of the global hybrid car market, which is expected to expand to 1.5 million vehicles next year, and further to 50 million in 2025.
In comparison, Korean makers still remain at a tottering stage with Hyundai-Kia set to put out its first LPG-based hybrid model in July, and a gasoline-electricity car next year. Only massive investment and vigorous R&D would help to realize the domestic industry's ambitious goal of jumping to become one of the world's four major makers of ``green cars."
On top of it, a drastic cost cut would require nothing less than a total overhaul of the production system and harsh industrial restructuring, heralding another round of labor-management confrontations. Employers and employees are urged to make a ``grand compromise" of job security guarantee and wage hike restraint. The government's policy should also be directed toward makers that maintain industrial peace and turn out more environmentally friendly and efficient cars.
If the government and business officials fail to adjust themselves to these new trends, the competition with new market leaders in Japan and Europe over futuristic cars in emerging markets will prove to be far more formidable than those with the waning U.S. rivals.