The South Korean government stepped in to buttress the automaking industry before it further crumbles amid signs of a breakdown in the supply chain from struggles of Korean car brands.

Heads of the country’s five finished carmakers as well as parts makers gathered for a government-industry meeting on Wednesday for the first time in two years to discuss joint measures for the industry faced with chain bankruptcies in the value chain as Korean cars increasingly lose appeal at home and abroad.

The attendees included Trade, Industry and Energy Minister Sung Yun-mo and Hyundai Motor Co. President Chung Jin-haeng, Kia Motors Corp. CEO Park Han-Woo, and GM Korea’s CEO & President Kaher Kazem.

Sung vowed emergency assistance to the second and third-tier suppliers, saying that the future of the Korean motor vehicle responsible for the country’s manufacturing activity and jobs would be at risk if it loses its value chain.

Finished car makers vowed to go all-out to protect the annual 4 million output threshold and restore shipments of 4.5 million units - a level kept from 2012 to 2015 when the country ranked the world’s fifth - by 2025 to safeguard the industry.

The country’s auto output has stopped at 3.28 million units for the first 10 months of this year and likely to ship out 3.95 million units at best by the end of the year, falling from 4.11 million units of last year and below the 4-million threshold for the first time in eight years. Its rank is expected to retreat to seventh behind Mexico and India.

The meeting came after the country’s major car makers reported disastrous results for the third quarter. The country’s largest two car producers, Hyundai Motor and Kia Motors said their third-quarter operating profit plunged 70 percent and 66.7 percent on quarter, respectively. GM Korea, the Korean unit of the U.S. auto giant General Motors, also said its car shipments during the first 10 months of this year fell 15.2 percent from a year ago. Its cumulative deficit is expected to reach 1 trillion won ($885 million) by the end of the year. Renault Samsung Motors, the Korean subsidiary of the French automaker Renault, reported a 17.3 percent drop in its output over the same period.

The slowdown in finished car makers’ assembly lines shook the suppliers whose revenue mostly hinge on local finished carmakers. As of October, nine local auto parts companies have filed for bankruptcy in Seoul.

Sales of imported cars are expected to reach fresh record-high in Korea this year as Koreans prefer foreign brands despite tax breaks on domestic car purchases. Korean cars also have lost appeal in overseas as they lag in both price and innovation competitiveness.

By Lim Sung-hyun and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]