[2020 Green Mobility Award] Jeong Manki "Eco-friendly Car Subsidy System Favoring Chinese Companies Needs Reform"

Jeong Manki, Chairman of the Korea Automobile Manufacturers Association, is giving a lecture on the topic "Global Eco-friendly Vehicle Market Trends and Our Choices" at the "2020 Korea Green Mobility Awards" hosted by Asia Economy on the 29th at the Chosun Hotel in Jung-gu, Seoul. Photo by Kang Jinhyung aymsdream@

[Asia Economy Reporter Kiho Sung] As the global automotive industry shifts its focus to eco-friendly vehicles, advice has emerged that South Korea needs to reform its subsidy system. While Chinese companies receive subsidies for eco-friendly vehicles in South Korea, China only provides subsidies for domestically produced vehicles.

On the 29th, Chung Manki, chairman of the Korea Automobile Manufacturers Association, stated at the '2020 Korea Green Mobility Awards' seminar held at the Westin Chosun Hotel in Jung-gu, Seoul, "As China plans to abolish subsidies for eco-friendly vehicles in the future, it is necessary to reform our subsidy system accordingly."

Chairman Chung diagnosed that the global automobile market entered a saturation phase in China since 2017, and due to stagnation in demand from developed countries, it has entered a negative growth era since 2018.

He explained, "Global production volume fell by -0.7 percentage points to 94.62 million units in 2018 compared to the previous year, and the decline expanded to -4.3 percentage points in 2019," adding, "As the traditional automotive industry shrinks, the restructuring of the global automotive industry is accelerating, focusing on future vehicles such as electric-powered and autonomous vehicles."

In particular, China is converting domestic demand stagnation into exports, concentrating on eco-friendly vehicles, making competition with our companies in overseas markets inevitable.

Therefore, there is urgent advice to reform the domestic subsidy system. Chairman Chung emphasized, "More than 40% of domestic electric bus subsidies are provided to imported Chinese buses," and "China only grants subsidies if vehicles produced in China are equipped with Chinese-made batteries." For example, even if a Korean company produces an eco-friendly vehicle in China, if it uses a Korean-made battery, it cannot receive subsidies from Chinese authorities.

As a solution, he stressed that subsidies for hydrogen buses, where domestic companies have strengths, should be increased to the same level as hydrogen passenger cars, and hydrogen refueling stations should be significantly expanded so that South Korea can take the lead in future eco-friendly vehicles.

Chairman Chung said, "The government must take the lead in strengthening mid- to long-term efforts to lead future vehicles," adding, "In the case of electric vehicles, our companies' technological capabilities are on par with the world. A dual strategy leading hydrogen vehicles is also necessary."

He continued, "The current subsidy system should be reformed as a method to nurture domestic companies," and explained, "It is also necessary to improve R&D productivity through expanded corporate R&D investment and increased government R&D tax credits."