Korean auto parts makers call for govt financial support

Representatives of South Korean auto parts makers on Friday called on the government to increase their financial support of the sector, including tax breaks and policy efforts for their transition to future vehicles.

In a meeting with Prime Minister Kim Boo-kyum at the Seoul Government Complex, they said many of the domestic auto components makers were being pushed to the brink of survival, which would eventually threaten the country's industrial foundation.

"We have made massive investments in line with new car delivery schedules, but now many of us have fallen into financial difficulties due to the delayed car production," they were quoted as saying in the gathering with the prime minister.

It was the first time for the automobile-related associations to unanimously express their financial difficulties directly to the country's prime minister.   

Their proposed financial support package includes corporate tax cuts; an extension of tax breaks on new car purchases; flexible labor market policies toward cutting labor costs; and policy support for their transition to future vehicles.

"Unless we are granted financial support to overcome this immediate crisis, many of them will be forced to shut down," Federation of Middle-Market Enterprises of Korea Chairman Kang Ho-gap told The Korea Economic Daily.

Among the reasons cited for their liquidity crunch were declining sales in combustion engines on the back of the government's ambitious goals to reduce carbon emissions, which Kang said has taken a toll on the automobile industry, regardless of technological competitiveness.

Participants in the meeting with the prime minister include Federation of Middle-Market Enterprises of Korea Chairman Kang Ho-gap, Korea Automobile Manufacturers Association Chairman Chung Man-ki and Korea International Trade Association Vice Chairman Lee Kwan-sup.

Write to Byung-uk Do and Il-gue Kim at dodo@hankyung.com
Yeonhee Kim edited this article.