▲2023 Automobile Industry Key Performance (Image Source: Ministry of Trade, Industry and Energy)

Best performance due to expansion of eco-friendly vehicle exports, increase in export price, and normalization of automotive semiconductor supply
Trade surplus of $55 billion in 2023… No. 1 export item, accelerated investment in electrification to strengthen exports
December 2023 Vehicle Exports to be $6.4 Billion… Up 18% YoY · Increase for 18 Consecutive Months
2023 Vehicle Production to reach 4.24 million units… Approximately 65% of domestically produced vehicles exported overseas

In 2023, automobile exports achieved the highest ever thanks to the premium eco-friendly vehicle export strategy that is in line with the eco-friendly and electrified trends in the global automobile market.

The Ministry of Trade, Industry and Energy (MOTIE) announced on the 16th that automobile exports in 2023 reached a record high of $70.9 billion for the first time ever, and the trade surplus reached $55 billion.

The $70.9 billion performance is a performance that exceeds the previous highest export amount (previous highest: $54.1 billion in 2022) by more than 30%, and is evaluated to have led to an improvement in our country's trade balance and the conversion to export plus in October 2023 by achieving a trade surplus of $55 billion (KRW 72 trillion, as of January 2024) and ranking first (second in 2022) among the 15 major export items.

In particular, amid concerns over a decrease in eco-friendly vehicle exports in our industry due to the implementation of the US Inflation Reduction Act (IRA) in August 2022, rental and lease businesses are expected to remain strong.Led by commercial eco-friendly vehicles, exports of eco-friendly vehicles (electric, hydrogen, plug-in hybrid) subject to the IRA to the US have reached a record high of 144,000 units, a 70% increase from 2022 (previous record: 84,000 units in 2022).

This appears to be due to the effectiveness of the strategy of expanding exports of high-priced eco-friendly vehicles (USD 24.2 billion, up 51% from 2022) by our automobile industry in line with the eco-friendly and electrification trends of the global automobile market, along with the efforts of the Ministry of Trade, Industry and Energy and the industry.

In 2023, the unit price of automobile exports also surpassed $23,000 for the first time (previous high: $21,000 in 2022), achieving qualitative innovation as well.

The Ministry of Trade, Industry and Energy said, “The $70.9 billion in exports in 2023 is the result of all-out cooperation between the public and private sectors in line with the eco-friendly and electrification trends in the global automobile market,” adding, “Although domestic and international economic conditions are not easy due to the global consumer slump and the war in Israel, the government plans to provide the best support possible so that the export momentum in 2023 can continue this year as well.”

In December 2023, automobile exports recorded $6.4 billion (+18% year-on-year), increasing for 18 consecutive months year-on-year, and have remained above $6 billion since last November.

December production volume reached 370,000 units (+4% year-on-year) based on the solid performance of major models such as Kona and Trax, and 140,000 units (-11% year-on-year) including imported cars were sold in the domestic market in December.

Automobile production in 2023 is expected to increase by 13% year-on-year to 4.24 million units due to the normalization of the supply of parts such as automobile semiconductors, recovering annual production to over 4 million units for the first time in five years since 2018 (4.03 million units).

Production volume by vehicle at domestic plants The ranking is Avante (270,000 units), Kona (250,000 units), Trailblazer (220,000 units), Trax (210,000 units), Sportage (210,000 units), and Tucson (190,000 units).

In particular, the increase in production helped relieve global demand due to COVID-19 and drove an increase in automobile exports, with approximately 65% (2.77 million units) of vehicles produced domestically being exported to overseas markets.

Domestic sales in 2023 increased by 3% year-on-year to 1.74 million units (domestic/import: 145/29), resolving accumulated waiting demand after COVID-19 and recording a positive growth rate for the first time in three years since 2020 (1.89 million units).

Meanwhile, the domestic eco-friendly car market recorded a high sales increase of 45% year-on-year for hybrid cars due to the effect of new cars such as the Grandeur Hybrid, and the high growth of hybrid cars is expected to contribute to providing sufficient work to the auto parts industry and expanding its capacity to transition to future cars.

Meanwhile, the government announced that it will extend the temporary investment tax credit and actively resolve related investment obstacles to ensure that domestic industries' investments in electrification, such as the electric vehicle-only factories currently being promoted in Ulsan and Hwaseong, can proceed without a hitch.

In addition, the Ministry of Trade, Industry and Energy, together with relevant ministries, plans to soon announce the 'Eco-Friendly Mobility Regulatory Innovation Plan' to expand the market for eco-friendly mobility and remove obstacles, and the 'Special Act on Promotion of Transformation of the Future Automobile Parts Industry and Fostering its Ecosystem', which passed the National Assembly last year, will be fully implemented in July 2024, and plans to provide intensive support so that this can be the first year for automobile parts companies to innovate their competitiveness.