South Korean media: China has become Korea's biggest automotive competitor, with a cost advantage of $4,700

Korean media: "The strongest competitor for Korean automobiles is not Japan, but China!"

On May 11, South Korean media outlet *Herald Economic* published an article stating that Lee Heng-gu, a researcher at the Korea Automotive Technology Institute, recently said during an event that the biggest competitor for Korea's automotive industry is China, rather than Japan. He stated, "The most formidable opponent is China. China has already achieved full vertical integration, and according to BYD’s standards, each unit enjoys a cost advantage of approximately $4,700."

China has significantly reduced costs by establishing a complete vertically integrated supply chain—from batteries to final vehicle assembly. Analysts believe that as China leverages this advantage to export domestic production capacity to overseas markets such as Europe, even high tariff barriers set by developed countries may become meaningless.

Lee Heng-gu said: "This means they have effectively internalized key components within their own country. With economies of scale, they sell about 16.3 million units annually, achieving a cost advantage of $4,700. Therefore, even with a 30% tariff imposed by the EU, it cannot stop them."

In fact, Chinese electric vehicles have already captured over 6.4% of the European market, approaching South Korea’s share (7.1%), and are rapidly gaining ground in emerging markets such as Vietnam and Indonesia—potentially leading to direct competition with Korean automakers.

Since 2011, the global automotive market has entered a phase of structural stagnation in growth. In South Korea, since 2015, overseas production has increasingly surpassed domestic output. Due to the impact of the pandemic, production has remained stagnant for the past three years, creating a peculiar situation: while original equipment manufacturers’ revenue continues to rise, the parts industry—which relies on physical sales—is facing financial distress.

Lee Heng-gu remarked: "Due to persistently high oil prices, the global auto industry is in a very difficult position. With production stagnant for three years, the parts sector is experiencing real disconnection and hardship."

He also emphasized: "Continuously reducing costs is an unavoidable task."

Original source: toutiao.com/article/1864854567606409/

Disclaimer: The views expressed in this article are solely those of the author.