page_title: Automotive industry crisis of 2008–2010
section_title: South Korea
hierarchical_section_title: Automotive industry crisis of 2008–2010 / Asia / South Korea
caption_attribution_description: English: Hyundai Genesis
context_page_description: The automotive industry crisis of 2008–2010 was a part of the financial crisis of 2007–2008 and the resulting Great Recession. The crisis affected European and Asian automobile manufacturers, but it was primarily felt in the American automobile manufacturing industry. The downturn also affected Canada by virtue of the Automotive Products Trade Agreement.
  The automotive industry was weakened by a substantial increase in the prices of automotive fuels linked to the 2003–2008 energy crisis which discouraged purchases of sport utility vehicles and pickup trucks which have low fuel economy. The popularity and relatively high profit margins of these vehicles had encouraged the American "Big Three" automakers, General Motors, Ford, and Chrysler to make them their primary focus. With fewer fuel-efficient models to offer to consumers, sales began to slide. By 2008, the situation had turned critical as the financial crisis of 2007–2008 placed pressure on the prices of raw materials.
  Car companies from Asia, Europe, North America, and elsewhere have implemented creative marketing strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales.
context_section_description: South Korean automakers have been generally much more profitable than their US and Japanese counterparts, recording strong growth even in depressed markets such as the United States. Despite a global economic slowdown, Hyundai-Kia successfully managed to overtake Honda Motor in 2008 as the world's 5th largest automaker, climbing eight rankings in less than a decade. Hyundai-Kia continued its rapid success in 2009, when only a year after overtaking Honda, it surpassed Ford Motor as the world's 4th largest automaker.
  Hyundai-Kia's continued success was unusual at a time when most automakers saw their sales falling sharply, with leading automaker GM even filing for bankruptcy. Hyundai-Kia took significant advantage of the prolonged automotive crisis by producing affordable yet high quality and well designed vehicles. Rapid globalization has seen state of the art factories being built in several countries including Slovakia, the United States and China. The manufacturing facilities have been geared-up to build products that are designed and engineered for local markets. The Kia Cee'd is a leading example, being designed, developed and engineered in Germany and built in Slovakia.
  Unlike others, this crisis turned into an opportunity for many South Korean automakers. Korean automaker Hyundai offered customers who have lost their jobs to return a new-car purchase for a refund. The continued growth and success is attributable to the country's fuel-efficient and well-equipped, yet affordable cars with generous warranties, such as the Kia Picanto, Kia Cee'd and Hyundai i30, which attracted global consumers at a time of severe economic recession, rapidly rising oil prices and increasing environmental concerns. South Korean automakers therefore had a competitive advantage against expensive luxury vehicles and SUVs from US, Japanese and German automakers.
  During the fourth quarter of 2008 to the first quarter of 2009, which was the height of this automotive crisis, the extremely weak South Korean won, especially against the US dollar and Japanese yen, significantly boosted the price competitiveness of South Korean exports in key markets. Another factor that helped maintain this momentum was an increasingly improving brand awareness, attributable to the introduction of the country's own luxury vehicles such as the Hyundai Genesis and Hyundai Genesis Coupe, which received highly positive awards in the press and reviews. Hyundai's brand grew by 9% in 2008, surpassing Porsche and Ferrari, while it used the Super Bowl football broadcast, the world's most expensive commercial air time, to promote the Hyundai brand in the United States.
  Nonetheless, South Korean automakers were not completely immune to this automotive crisis and in December 2008 Hyundai Motor Company had begun reducing production at plants in the U.S., China, Slovakia, India and Turkey because of sluggish demand. The company missed an earlier projection of 4.8 million units for 2008 and announced a freeze of wages for administrative workers and shortened factory operations as demand weakened amid the financial crisis of 2007–2008.
  South Korea's fourth largest automaker, SsangYong Motor, owned by the Chinese automobile manufacturer SAIC (Shanghai Automotive Industry Corporation), is the worst affected company in this crisis as it manufactures mainly heavy petroleum consuming SUVs. The carmaker recorded its fourth straight quarterly losses by the end of 2008 with red ink of $20.8 million in the third quarter. Also during the July to September period, sales dropped 63 percent to 3,835 vehicles. Its production lines have been idle since December  17 as part of efforts to reduce its inventory. The automaker has halted production twice previously this year. In December 2008, SAIC gave an ultimatum to the SsangYong union to accept its restructuring plan or face the parent company's withdrawal, which, if implemented, would mean certain bankruptcy. A 70% share of SsangYong was acquired by India's Mahindra & Mahindra Limited in February 2011.
  However, the South Korean Ministry of Kno
caption: The Hyundai Genesis named the 2009 North American Car of the Year.
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