Automotive Industry Growth Slows After Two Months... Impact of Semiconductor Shortage and More

March Production, Domestic Sales, and Exports All Decline... Impact of Base Effect Also Noted

[Sejong=Asia Economy Reporter Kwon Haeyoung] The growth trend of South Korea's automobile industry has been halted after two months. Due to the base effect and the shortage of vehicle semiconductors, production, domestic sales, and exports all turned to a decline simultaneously.

According to the 'March Monthly Automobile Industry Trend' announced by the Ministry of Trade, Industry and Energy on the 13th, automobile production decreased by 9.5%, domestic sales by 0.9%, and exports by 1.4% compared to the same period last year. The momentum of 'triple double-digit growth' in production, domestic sales, and exports for two consecutive months this year has been broken.

Automobile production was affected comprehensively by the semiconductor supply disruption leading to reduced output at Korea GM's Bupyeong 2 plant, Renault Samsung's suspension of Nissan Rogue exports, and Ssangyong Motor's sluggish domestic and export sales, resulting in 333,848 units produced. Domestic sales were recorded at 171,340 units. Despite the new car effect in the domestic industry, sales slightly decreased due to the base effect and other factors.

Domestic cars sold 140,523 units, down 6.2%, due to disruptions in the supply of vehicle semiconductors and other parts. On the other hand, imported cars saw a 33.7% increase, with 30,817 units sold, driven by the strong performance of most brands. The top five best-selling vehicles, led by the Grandeur, were all domestic cars.

Exports slightly decreased to 203,837 units due to the base effect from last March when sales expanded by clearing backlogged demand. However, thanks to the increased export proportion of high value-added models such as sport utility vehicles (SUVs) and electric vehicles, export value rose by 15.3% to reach $4.4 billion. This is the highest since December 2016 ($4.52 billion).

Focusing only on eco-friendly vehicles, domestic sales increased by 59% year-on-year to 30,316 units, showing growth for 14 consecutive months. Their share of total domestic sales reached 17.7%, the highest monthly record ever. Exports rose by 29.3% to 33,164 units, and export value increased by 34.4% to $820 million. Their share of total exports was 16.9%.

Automobile parts exports increased by 13.9% to $2.2 billion due to strong global market sales. Although March saw a decline, the strong performance in January and February led to overall growth in the first quarter for automobile production (12.2%), domestic sales (11.3%), and exports (16.9%) compared to the previous year. This is the first time in seven years since 2014 that production, domestic sales, and exports all grew in the first quarter. Domestic sales set the highest record ever for the first quarter, and export value ($11.92 billion) ranked third largest after the first quarters of 2014 ($12.48 billion) and 2012 ($12.3 billion).

For eco-friendly vehicles, exports achieved a record high for the quarter, and domestic sales recorded the second-best performance ever.