How did Japan's Crisis Affect Korean Auto Industry? Options

[tom2011]

Renault/Samsung, and GM Korea are both facing parts shortage, which will limit their production and domestic sales, hurting their bottom lines. Hyundai and Kia on the other hand, which do not rely on Japanese parts, are expected to clean up the domestic market, and increase their market shares further overseas.

http://rumors.automobilemag.com/earthquake...ndai-36027.html

This post has been edited by tom2011: Mar 26 2011, 05:47 AM

[KraterosHellas]

u are such a loyal korean as ever. keeps up with south korean corporate news every day lol

[tom2011]

u are such a loyal korean as ever. keeps up with south korean corporate news every day lol

That's because I'm a loyal Korean corporate worker, and our company's bottom line is very good right now. I'm expecting another huge end of year bonus increase this year.

Still haven't told me what nationality you are claiming to be.

[KraterosHellas]

^if u don't know my ethnicity, clearly u haven't been here long enough. but let's just say i'm asian.

[tom2011]

^if u don't know my ethnicity, clearly u haven't been here long enough. but let's just say i'm asian.

Asian could mean Indian, Chinese, South E.Asian, Filipino, to Central Asian republics. That's a broad brush to stroke. Why don't you at least pick one and try to stick to that claim?

[fivers]

^if u don't know my ethnicity, clearly u haven't been here long enough. but let's just say i'm asian.

let's just say you're asian?! does that mean that you could be non-asian also?

[KochiGachi]

Renault/Samsung, and GM Korea are both facing parts shortage, which will limit their production and domestic sales, hurting their bottom lines. Hyundai and Kia on the other hand, which do not rely on Japanese parts, are expected to clean up the domestic market, and increase their market shares further overseas.

http://rumors.automobilemag.com/earthquake...ndai-36027.html

Actually, it may only benefit heavy industrial sector to consumable industry that used to compete with Japanese competitors.
Auto industry will suffer due to cripple Japanese auto part industry. Hyundai-Kia have connection with Mitsubishi so ultimately they will have to find local part suppliers.

[tom2011]

Hyundai-Kia have connection with Mitsubishi so ultimately they will have to find local part suppliers.

No they don't. Where are you getting this from?

[DewDrop]

Yes, Japanese auto-parts will get hurt since the earthquake and nuclear crisis has made many auto-parts supplies to shut down.

Many are considering moving production of critical components to China.

I read this in a recent article about Japanese automotive industry part makers.

so I'm not a troll.

[KraterosHellas]

don't japanese auto companies have most of their factories abroad?

[Minq]

Yeah I read about moving production to China as well. Japanese (and other East Asian companies) have most of their assembly plants in China but the parts themselves gets made domestically and then shipped to China. Japan, alongside Germany, pretty much has the entire machines/mechanical parts market to themselves.

[tom2011]

Wall Street Journal says in the long term, many companies will turn to South Korea for parts and South Korea could be the country that benefits the most out of this misfortune for Japan.

http://online.wsj.com/article/SB1000142405...eTabs%3Darticle

This post has been edited by tom2011: Mar 31 2011, 12:35 AM

[KraterosHellas]

^it's like a chain. japan-->the tigers-->china

[KaptainAmeriKa]

^it's like a chain. japan-->the tigers-->china

Expensive, semi expensive, to cheap. Capitalism has something to do with it I guess.

[tom2011]

Motortrend says Hyundai/KIA are one of the few automakers who will not be effected at all. Less than one percent of parts come from Japan, and most of it is for an alternator for the old outgoing V6 Lambda engine found in low volume cars like the Veracruz and Azera. I can tell you right now, our factory is in a complete overdrive, trying to keep up with all the flood of new orders all over the world, ever since our competitors in Japan went out of production. It's a fantastic feeling to know that we'll be in for large bonus this year. It maybe enough buy me a new car this year. It's like hitting a jackpot or winning the lottery, or something.

http://wot.motortrend.com/hyundai-producti...cted-61973.html

This post has been edited by tom2011: Mar 31 2011, 04:06 PM

[charizardpal]

^if u don't know my ethnicity, clearly u haven't been here long enough. but let's just say i'm asian.

I can tell from the way you write that you're probably from New Zealand.

Renault/Samsung, and GM Korea are both facing parts shortage, which will limit their production and domestic sales, hurting their bottom lines. Hyundai and Kia on the other hand, which do not rely on Japanese parts, are expected to clean up the domestic market, and increase their market shares further overseas.

http://rumors.automobilemag.com/earthquake...ndai-36027.html

Interesting. Where do they get their parts from if not Japan? Surely they don't make them all themselves?

[KraterosHellas]

I can tell from the way you write that you're probably from New Zealand.

wow how did u know?!

[initially]

Hyundai/Kia/etc are doing well internationally having increased the quality of their products exponentially in the past few years (they did start out as econo-boxes). Chinese car makers like Great Wall is currently filling that role right now, but in 2-3 years time I would expect them to compete heavily with Hyundai for budget cars, trucks and SUVs.

On an international scale, the Japanese car makers however has the mid to upper tier luxury models to themselves as well as sports cars, plus they lead all Asian manufacturers in motoring technologies such as electric and hydrogen powered vehicles, self-parking, double clutching gearboxes and so on. This takes years to develop, if Korea or China wants some of that then they will have to buy parts and copy the technology (almost impossible). Domestically, the same Japanese companies have already created an untouchable market for themselves selling kei cars/vans/trucks.

[tom2011]

Hyundai/Kia/etc are doing well internationally having increased the quality of their products exponentially in the past few years (they did start out as econo-boxes). Chinese car makers like Great Wall is currently filling that role right now, but in 2-3 years time I would expect them to compete heavily with Hyundai for budget cars, trucks and SUVs.

On an international scale, the Japanese car makers however has the mid to upper tier luxury models to themselves as well as sports cars, plus they lead all Asian manufacturers in motoring technologies such as electric and hydrogen powered vehicles, self-parking, double clutching gearboxes and so on. This takes years to develop, if Korea or China wants some of that then they will have to buy parts and copy the technology (almost impossible). Domestically, the same Japanese companies have already created an untouchable market for themselves selling kei cars/vans/trucks.

I think you're really underestimating Hyundai here. My company supplies them with some of the vital components that they need to make cars, and I can tell you right now, they do not rely on Japanese component makers at all. It's one of the few auto companies in the world that doesn't.

electric and hydrogen powered vehicles, self-parking, double clutching gearboxes

Hyundai will roll out a hybrid Sonata car in a few weeks based on a new battery that the Japanese have yet to use. And this car will not be priced way above a regular car, like the Toyota. Hyundai is also testing a hydrogen based car and they are planning to sell them in 2012, three years ahead of Toyota and Honda. See here: http://inhabitat.com/hyundai-to-sell-hydro...l-cars-in-2012/ As for dual clutching gearbox? Hyundai got that covered as well, with the new Veloster car that is on sale next month, and plans for putting them in the new i40 and possibly in a 200+ HP turbo charged Avante (called the Elantra in North America).

It took Hyundai 30+ years for them to get to this stage, where they are just starting to be known as a reliable brand. But they still have a lingering negative image that's out of step in time. To get to where they are today, they had to go through a lot of frustration, mistakes, hard work, research, and a lot of eating humble pie especially vis a vie the Western media whose favorite target of joke was Hyundai. That is why I think it will take much more than 2 or 3 years for the Chinese to get to the same stage as Hyundai - even if they theoretically started making the same quality cars as Hyundai. In the auto industry, consumers are much more fickled than consumers who buy fridges. They not only demand reliable cars, they also demand image. No matter how cheap your cars are, they will not buy it if the image is poor - as Hyundai (which is the second most reliable non-luxury brand in North America according to JD Power's 3 year study of year 2008 models) learned harshly over the last couple of decades. That is something the Chinese auto makers will also have to go through - not just build quality, but also build brand image - sort of like paying their dues. And even then, as Hyundai has learned, may not be enough because once you got that image of low quality cheap car, it's very difficult to shake the image and it will take decades for that negative image to be shed. I'm not saying that China won't eventually do it. I'm saying it's highly doubtful that they can do that in 2 or 3 years (I'm talking about in the Western markets where most of the sales and money revenue and trends are).

This post has been edited by tom2011: Apr 2 2011, 09:42 PM

[initially]

I think you're really underestimating Hyundai here. My company supplies them with some of the vital components that they need to make cars, and I can tell you right now, they do not rely on Japanese component makers at all. It's one of the few auto companies in the world that doesn't.

I'm not trying to undermine Hyundai by saying that they use Japanese parts, however through research and development, companies often have to assess other brands to develop their own even if it means buying them. This is normal behaviour in the motoring industry. Once upon a time Hyundai were using Mitsubishi engines where much of the DNA may have transcended into current engines.

Hyundai will roll out a hybrid Sonata car in a few weeks based on a new battery that the Japanese have yet to use. And this car will not be priced way above a regular car, like the Toyota. Hyundai is also testing a hydrogen based car and they are planning to sell them in 2012, three years ahead of Toyota and Honda. See here: http://inhabitat.com/hyundai-to-sell-hydro...l-cars-in-2012/ As for dual clutching gearbox? Hyundai got that covered as well, with the new Veloster car that is on sale next month, and plans for putting them in the new i40 and possibly in a 200+ HP turbo charged Avante (called the Elantra in North America).

The "new battery" that you're referring to is simply lithium polymer, the same technology used by remote controlled cars, notebooks and wireless devices. The Tesla Roadster has it, even Audi have already tested this successfully last year. The problem with it is that it costs more, runs hotter and doesn't last as long as NiMH which can eventually compromise safety standards if not developed right. Hyundai might however try to develop a market where these batteries have to be consumed every 2-3 years just like the existing batteries normally used for starting up and electrics until the technology matures and can be used safely. I think if Toyota were confident in the technology they would have used it by now. We can only wait and see.

Honda have been testing the FCX since 2006 and have already sold them in numbers in the US and Japan, but only in destinated areas where Hydrogen pumps are facilitated. Hydrogen technology has to be a nationally accepted alternative to petrol/gas/diesel in Korea for it to sell. I have never seen a Hydrogen pump available anywhere in Seoul.

Also, there is a big difference between promising and actually producing these hydrogen and dual-clutching cars in a couple of years. Again, we can only wait and see if Hyundai can deliver in such a short time without any real world simulation of actually testing by real world consumers, particularly on a global scale.

It took Hyundai 30+ years for them to get to this stage, where they are just starting to be known as a reliable brand. But they still have a lingering negative image that's out of step in time. To get to where they are today, they had to go through a lot of frustration, mistakes, hard work, research, and a lot of eating humble pie especially vis a vie the Western media whose favorite target of joke was Hyundai. That is why I think it will take much more than 2 or 3 years for the Chinese to get to the same stage as Hyundai - even if they theoretically started making the same quality cars as Hyundai. In the auto industry, consumers are much more fickled than consumers who buy fridges. They not only demand reliable cars, they also demand image. No matter how cheap your cars are, they will not buy it if the image is poor - as Hyundai (which is the second most reliable non-luxury brand in North America according to JD Power's 3 year study of year 2008 models) learned harshly over the last couple of decades. That is something the Chinese auto makers will also have to go through - not just build quality, but also build brand image - sort of like paying their dues. And even then, as Hyundai has learned, may not be enough because once you got that image of low quality cheap car, it's very difficult to shake the image and it will take decades for that negative image to be shed. I'm not saying that China won't eventually do it. I'm saying it's highly doubtful that they can do that in 2 or 3 years (I'm talking about in the Western markets where most of the sales and money revenue and trends are).

As I've said in my previous post, Hyundai/Kia has definitely improved over the past few years and yes they have always been subjected to market taunting and social stigmas because of their humble beginnings. But like I said, if Hyundai is to compete globally then not only do they have to follow and catch up to the Japanese, but they also have to watch their backs with Chinese manufacturers in the rear. Many European and North American companies have used China as a basis for developing their products, I wouldn't be surprised if China came out with very similar local brands to compete at a much cheaper price. In fact, I wouldn't be surprised if China decide to buy out some of these brands (just like India bought out Jaguar and Malaysia buying out Lotus). That would certainly be a quick fix to market affordable cars while retaining a "brand name".

I like where Hyundai is heading (drove a rental i30 once and loved it), however I would like to see more Asian companies take on genres other than the economy-mid tier market such as motor racing (F1), high level sports cars (to compete against Ferrari, Lambos etc), aerospace technologies and agricultural machineries rather than compete against one another in the same market. The Japanese has no less than 12 different motoring companies often residing in the same industrial park, yet they are still able to survive in the same industry specialising in different sub markets.