The number of South Korean auto parts companies decreased by 190 in five years
On May 20, according to Yonhap News, South Korea's auto parts industry is facing a crisis of rapid transition to electrification. Compared with traditional internal combustion engine cars, electric vehicles have fewer parts and simpler processes, so it is difficult to increase sales. With the rapid transition to the cars of the future, fears that more component makers would go out of business are coming true.
According to the Korea Automobile Industry Cooperative, the number of Tier 1 suppliers that deal directly with domestic automakers (Hyundai Motor, Kia Motors, General Motors Korea, Renault Korea, KG Mobility and Tata Daewoo) fell to 691 last year, down 2.2 percent from the previous year.
Among them, 299 large companies (43.3%) and 392 small companies (56.7%). The number of large enterprises decreased by two, while the number of small and medium-sized enterprises decreased by 36. The number of parts companies has steadily declined from 824 in 2019 to 744 in 2020, 732 in 2021 and 729 in 2022. It can be seen that in the past five years, the number of small and medium-sized enterprises has decreased by 160, while the number of large enterprises has decreased by 30, and the gap is obvious.
It is reported that this is due to the sharp increase in sales of environmentally friendly vehicles, mainly hybrid vehicles, since 2019, which has led to a sharp increase in demand for related components such as electric motors, but Korean parts manufacturers are unable to cope with the change. In addition, South Korean component manufacturers mainly rely on supplying internal combustion engine components to Hyundai and Kia, but are almost unable to provide electric vehicle components due to limited technological capabilities. Last year, they supplied 89.9 per cent of their parts to Hyundai and Kia.
"Hyundai and Kia are increasing the proportion of purchasing electric vehicle parts through their affiliates," an industry source said. He also said, Companies that are highly dependent on Hyundai Motor Group will go bankrupt.
In addition, electric vehicles have a smaller number of components compared to internal combustion engines, which is also a factor affecting profits. An internal combustion engine requires an average of 25,000 to 30,000 parts, while an electric car only needs 15,000 parts, half of the internal combustion engine. As engine, exhaust and fuel system components are eliminated in the transition to electric vehicles, the number of powertrain components is also decreasing.
Article from "PKT AUTO PARTS"
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