SEOUL – South Korea's automotive industry experienced a rare "triple decline" in May, with production, exports, and domestic sales all recording year-on-year drops. According to data released by the Ministry of Trade, Industry and Energy on June 17, the sector faced a challenging month due to supply chain disruptions and reduced operating days.
The country’s total automotive exports in May reached $5.83 billion, down 5.9% compared to the same month last year. Exports to major markets, including North America, the EU, Asia, and the Middle East, all saw a downturn. Analysts attribute this slump to complex factors, including logistical hurdles stemming from the prolonged conflict in the Middle East and a decline in used car exports.
Domestic production also struggled, falling 8.2% to 330,000 units, while domestic sales decreased by 10.3% to 127,000 units. Industry experts pointed to production delays caused by local auto parts supply shortages and consumer anticipation for new model releases scheduled for the second half of the year as primary drivers for the cooling demand.
Despite the overall downturn, the eco-friendly vehicle segment continued its strong momentum. Exports of eco-friendly vehicles reached $2.4 billion, a 9.9% increase from the previous year, now accounting for over 40% of total automotive exports. Hybrid models proved particularly vital, driving approximately 65% of eco-friendly exports.
The domestic market followed a similar pattern, with eco-friendly vehicle sales rising 5.5% to 77,000 units, capturing over 60% of total domestic sales. Notably, sales of electric vehicles (EVs) saw a remarkable surge of 65.4% to 35,000 units.
The Ministry of Trade, Industry and Energy expects a gradual recovery in production and exports starting in June, as the supply of auto parts normalizes.
"While we expect a turnaround, we remain cautious about external uncertainties such as the global economic slowdown and the increasing trend of local procurement by major global automakers," said a ministry official. "We will continue to maintain close communication with industry leaders and closely monitor the shifting dynamics of both parts supply and export markets."
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