[Report] From Parts Production to Export... Full-Scale Effort to Achieve $100 Billion Car Export Milestone

Ministry of Industry Raises This Year's 'Car + Parts' Export Target from $98.4 Billion to $100 Billion
Internal Combustion Engine Parts Company Konek Achieves Milestone Supplying Tesla After Business Restructuring

On the 23rd, a representative from Konek is explaining the production facility.

"This year, to ensure that automobile exports play a leading role in the recovery of the Korean economy, we have raised the export target for automobiles (including parts) to 100 billion dollars (76 billion dollars for vehicles and 24 billion dollars for parts), and we will do our utmost to achieve this goal."

On the 24th, Kang Kyung-sung, the 1st Vice Minister of the Ministry of Trade, Industry and Energy, who met at Hyundai Motor's Asan plant, announced the increased automobile export target for this year. Earlier, at the end of February, the Ministry of Trade, Industry and Energy had set the 2024 export target for automobiles (including parts) at 98.4 billion dollars, a 5% increase compared to the same period last year, but within three months, the target was raised to 100 billion dollars.

Vice Minister Kang emphasized, "The automobile industry is a leading advanced industry and a core industry in Korea that employs the most people. The Korean automobile industry is undergoing a major transformation from internal combustion engine vehicles to electric and eco-friendly vehicles to secure international competitiveness." He added, "Thanks to excellent manufacturing companies, high national trust, and low tariffs through Free Trade Agreements (FTAs), we believe achieving the export target of 700 billion dollars this year is possible."

The background for the Ministry's upward revision of the target is the recent strong performance in automobile exports. Last month, automobile exports recorded 6.79 billion dollars (+10.3%), surpassing the previous record high of 6.53 billion dollars set in November 2023, marking the highest export amount ever.

On the 24th, Kang Kyung-sung, Vice Minister of Trade, Industry and Energy, is explaining to reporters about the expansion of the automobile export target.

Korean automobile exports start from parts manufacturers. On the 23rd, we visited Konek, an automobile parts company established in 2003. Originally a manufacturer of transmission cases for internal combustion engines, the company transformed into a future car parts supplier by developing motor and reducer cases for electric vehicles through government-supported business restructuring R&D from 2020 to 2023 amid worsening business conditions in 2018, and now supplies Tesla. On that day, gearboxes destined for Tesla's U.S. plant were being produced at Konek's factory. A Konek official explained, "We have been registered as a Tesla partner since 2016 and secured orders for gearboxes for Model 3 and Model Y in 2019-2020. We shortened the usual 12-15 month development period to 4 months, gaining recognition for our technology and supplying these to Tesla."

Konek is expanding its business from internal combustion engine parts to eco-friendly vehicle parts. Thanks to this, it achieved sales of 230 billion won last year. Sales in the eco-friendly vehicle sector, including electric and hybrid vehicles, account for about 65% of total sales. Konek's sales target for 2027 is 500 billion won.

Hyundai Mobis has rapidly grown its sales in the electrification sector, including core power modules for electric vehicles, from 4.2 trillion won in 2020 to 12.2 trillion won in 2023 through active R&D investment. The Hyundai Mobis Jincheon plant, established in February 2008 and visited after Konek, is a core factory of Hyundai Mobis that recorded 5 trillion won in sales last year. It serves as a 'mother factory' that horizontally deploys manufacturing technology to overseas plants and partner companies. Major products include infotainment (IVI) systems providing autonomous driving and vehicle status display/control functions, electrification parts such as power modules, smart mobility, and safety parts.

Hyundai Mobis Production Plant.

Upon entering Plant 1 wearing anti-static clothing and shoes to prevent static electricity, the first thing that caught the eye was the SMD line where components are mounted on printed circuit boards. Robots were rapidly soldering and placing electronic components such as capacitors on the circuit boards. Finished products are assembled on the second floor. Here, about 10,000 IVI units and MEBs controlling airbags are produced daily. Since 2022, Hyundai Mobis has expanded its business by mass-producing power modules, a core component of electric vehicles.

A Hyundai Mobis official said, "Although finished car production has stagnated since COVID-19, Hyundai Mobis's sales continue to grow due to an increase in new electric and electronic parts such as lasers and camera sensors driven by the transition to future vehicles. The number of option parts per vehicle has doubled compared to internal combustion engines, effectively doubling sales per vehicle. We expect sales to increase by nearly 1 trillion won this year."

Following the parts manufacturers, we visited Hyundai Motor's Asan plant, which produces finished vehicles. The Asan plant produces about 110 vehicles per day, including the electric vehicle Ioniq 6, Sonata, and Grandeur, with an annual maximum capacity of 300,000 vehicles and a usual production volume of 240,000 vehicles. Last year, 283,000 vehicles were produced, of which 116,000 were exported.

Upon entering the press plant, large steel coil plates resembling rolls of toilet paper were noticeable. To diversify its supply chain, the Asan plant sources coils from Hyundai Steel and POSCO. The coils go through a 'blanking line' where they are washed and cut into sizes used for vehicle production. Then, each part is welded into a single car body, painted in the customer's desired color, and proceeds to the assembly plant. Upon entering the assembly plant, doors are removed first to avoid interference during assembly. Most assembly work is done by robots. The car body is scanned by laser to confirm position, and robotic arms approach to assemble. Different order information by model is confirmed through RFID tags attached to the top of the vehicle. In the assembly plant, vehicles are produced at a rate of one every 57 seconds.

Glovis Star scheduled to depart on the afternoon of the 24th. Carrying approximately 5,200 vehicles, it is heading to locations such as Wainami and San Diego in the United States.

After parts are manufactured and assembled into finished vehicles, they are exported through ports. On that day, at Kia's dedicated automobile export dock located at Pyeongtaek Port, vehicles were being exported worldwide through the 4th and 5th berths of the East Dock. A transport team of 11 people was loading 80 to 100 vehicles per hour onto ships. The afternoon departure of the Glovis Star was carrying about 5,200 vehicles from Pyeongtaek and Shanghai, China, bound for destinations such as Wilmington and San Diego in the United States. Jang Se-won, head of Kia's export shipping team, said, "In January 2019, we reached 10 million vehicles exported from Pyeongtaek Port, and in December 2020, 20 million vehicles were exported nationwide. Last year, of the 1,048,000 vehicles exported, 633,000 were shipped from Pyeongtaek Port. This year, we aim to export 1.07 million vehicles (650,000 from Pyeongtaek Port) and will do our best as an export frontline base."