South Korea’s suppliers see gains beyond their borders

Acquisition, divestment & Spinoff

South Korean suppliers are well-poised to benefit from several trends in the global and domestic economy: FTAs, Japanese and foreign carmaker’s diversification of supplier base, HKAG’s overseas expansion strategy and domestic expansion strategy of foreign-owned carmakers

South Korean automotive suppliers have pretty much grown in tandem with South Korean carmakers, especially Hyundai and Kia. This has worked well for the suppliers and in some cases has helped automotive suppliers, such as Hyundai Mobis and Hyundai Wia, become global players. However, going forward, South Korean suppliers will have to look beyond HKAG to grow, and for some suppliers this is a clearly stated goal. Other automotive suppliers, especially the smaller second and third tier suppliers, will primarily continue to focus on supplying South Korean carmakers in the domestic market and on export sales, especially those that are unable to make direct overseas investments. Automotive parts sales in South Korea have mirrored this trend, with export sales increasing from 17% in 2006 to 28% in 2013 and OEM sales declining from 78% to 68% during the same period.

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