This article covers the history of the Korean automobile, from its early introduction to the development and evolution of domestic vehicles and its growth to the present day, and in particular, the technological innovations and challenges that the Korean automobile industry will need in the future to remain competitive in the global market.
What is the most common mode of transportation we see around us? Most people would answer that question with an automobile. More than just a means of transportation, cars are deeply entrenched in our lives and culture. However, the history of automobiles in South Korea is actually not that long. So, how did Korean automobile history begin? Let’s take a look at what Korean cars are and how they’ve changed.
The first automobile in Korea is believed to have been imported by American engineer Horace Newton Allen in 1903 to celebrate the 40th anniversary of Emperor Gojong’s ascension to the throne. However, there is no detailed record of the car, so some say it was a Ford Model A limousine and others say it was a Cadillac. Later, in 1911, two cars were introduced for the imperial family and one for the governorate. One was a British-made Daimler limousine for the late emperor, and the other was an American-made Cadillac for the purebred emperor. At this time, automobiles were a luxury accessible only to the elite, and distant to the general public.
It is believed that after 1915, when the wealthy began to import and use automobiles, civilians gradually began to use them as well. However, in the early days, owning and driving a car was very rare, especially due to poor road conditions, which made it difficult for cars to get around. However, during the Japanese occupation, many cars were imported and sales and service companies were established, and by 1945, the number of cars in Korea had increased to 7,386.
After the Korean War, demand for cars continued to grow despite the difficult economic conditions. At this time, some cars began to be built domestically, utilizing parts from the U.S. military, a move that can be considered the beginning of the Korean automobile industry. The first Korean car was the Sibal, which was built in 1955. It was a jeep-like passenger car created by three brothers, Choi Moo-sung, Choi Hye-sung, and Choi Soon-sung, who worked as auto mechanics in Seoul. The brothers used the engine and transmission of a Jeep received from the U.S. military and stretched a drum to make a car. The brothers were proud of their first domestic car, which had a 50 percent localization rate. However, it took four months to make a single car and cost 80,000 hwan. At the time, 80,000 hwan was very expensive, roughly $4,000 or more in today’s dollars, so few people bought the car. Then, in October 1955, Choi Moo-sung exhibited the Sibal car at an industrial fair held at Gyeongbokgung Palace to commemorate the 10th anniversary of Korea’s liberation. The car was selected as the best product and won the Presidential Award. When the news was widely reported in the newspapers, his shabby tent factory at the entrance to Euljiro was swarmed with customers who wanted to buy Sibal cars, and the price rose to 300,000 hwan overnight. Within a month of receiving the presidential award, the brothers had earned a down payment of 100 million hwan. With this money, the brothers built a factory and buying facilities, and began mass production. However, the May 16 Revolution ended government subsidies, and production was halted in 1963, losing out to the new Nara cars that came out in 1962.
Until the 1970s, most Korean automakers made cars by contracting with overseas companies, importing key parts and assembling them in Korea. In 1966, Shinjin Motor entered into a technical partnership with Toyota Motor Corporation of Japan to produce the Corona, Crown, and Publica. In 1967, when the Second Economic Development Plan began, South Korea’s policy of fostering the heavy chemical industry was in full swing. In December of that year, Hyundai Motor Company was founded. In 1968, Hyundai entered into a technical alliance with Ford to produce the Cortina and Ford 20M. Asia Motors, founded in 1965, partnered with Fiat to produce the Fiat 124 in 1970. Asia Motors’ Fiat 124, Shinjin Motors’ Corona, and Hyundai Motor’s Cortina formed Korea’s first passenger car competition in the early 1970s. In 1962, Kia introduced the K-360, a three-wheeled small cargo vehicle, and in 1963, the lightweight T-1500, in partnership with Japan’s Oriental Kogyo, ushering in the era of the yongdal car. The Korean automobile industry was now a four-company competition.
In 1972, Toyota Motor Corporation withdrew from the budding automobile industry to enter China, and instead formed GM Korea in a joint venture with GM to produce Chevrolet and Record. In 1967, the Korea Development Bank acquired the Korean side of GM Korea and renamed the company Saehan Motors, and in 1978, the bank’s holdings were transferred to Daewoo Group, which restarted the company as Daewoo Motors. Kia Motors built a comprehensive automobile plant in 1974 and introduced the Brisha, which successfully localized more than 80 percent of its engines. In 1975, Hyundai Motor unsuccessfully sought capital cooperation with Ford, but then developed the Pony, the first indigenous model car with 90% localization. The Pony was an economical car that suited Korean tastes and Korean road conditions, and its durability made it popular with the public, ushering in the era of the mi-car. After the introduction of the Pony, mid-size cars, which accounted for 80% of the passenger car market, were pushed aside and the era of small cars began. It was also the first domestic passenger car to be exported to Ecuador, taking the Korean automobile industry to the next level.
In 1980, Kia Motors launched the Bongo to fill the gap between large cars and passenger vans, and it was an instant hit. In 1980, the automobile industry faced a crisis due to high oil prices caused by the second oil crisis. In 1981, the government implemented measures to rationalize the automobile industry to save the industry. As a result of the rationalization, the production of passenger cars was monopolized by Hyundai and Daewoo. Small and medium-sized trucks were monopolized by Kia, which normalized the management of each company. Daewoo dominated the luxury car market, while Hyundai dominated the mid- to low-priced market. However, after the automobile industry rationalization measures were lifted in 1986, Hyundai dominated the luxury car market with the Grandeur.
Since then, a wide variety of cars have been released and have become a popular means of transportation. Since then, Korea has become more technologically independent and industrialized since it began exporting to the global market. By 1996, Korea had emerged as the world’s fifth largest automobile producer with an annual production of 2.8 million units. However, in 1997, the domestic market collapsed due to the IMF crisis, and a major restructuring of the automobile industry took place. After the restructuring, only Hyundai Motor and Kia Motors survived. GM Daewoo was sold to GM of the United States, and Samsung Motor was acquired by Renault of France. Ssangyong Motor became the largest shareholder of Mahindra, an Indian automobile company.
Automobiles have been in Korea for about 100 years, and Korea has been developing, producing, and exporting its own cars for about 40 years. Despite this short history, South Korea has achieved a remarkable feat: it ranks fifth in the world in terms of automobile production. In recent years, the country has been trying to not only increase its production capacity, but also to upgrade its cars, making it a more competitive automotive powerhouse in the global automotive market. However, to lead the automotive industry of the future, Korea needs to go beyond mere production numbers and take the lead in advanced technologies such as electric vehicles and autonomous vehicles. In order to achieve sustainable growth and development, Korea’s automotive industry will need to continue to innovate and strengthen its competitiveness in the global market.
