As the domestic automobile industry faces a complex crisis both at home and abroad, there have been calls for substantial policy support from the new government. The automotive industry has requested support measures aimed at securing competitiveness in areas such as tax and labor.
The Korea Automobile Industry Association (KAIA) held the 42nd Automobile Mobility Industry Forum on the theme of 'Automobile Industry Policy Tasks Desired by the New Government' on the 24th at the Automobile Hall in Seocho-gu, Seoul.
Gang Nam-hoon, chairperson of the Korea Automobile Industry Association, said, "In this transitional period, the crisis in the automobile industry could lead to a crisis in national manufacturing as a whole, so policy backing to turn this into an opportunity is critical."
He noted, "The export environment is deteriorating due to the strengthening of protectionism in the U.S. and Europe, the expansion of China's leadership in future car technology, and the slowing global demand for electric vehicles, while domestic demand recovery remains unstable and the production base is shaky."
He stated, "The overall imbalance in the industry ecosystem is accumulating, with declining revenue for parts companies, investment contraction, and employment instability," and added, "Comprehensive policy responses are needed for domestic demand activation, transition to future vehicles, trade responses, and workforce development."
Key policy tasks proposed include ▲ extending the individual consumption tax exemption for old vehicle replacement by six months ▲ increasing the tax credit for national strategy technology facility investment in the future car industry from 5% ▲ temporarily expanding subsidies for electric vehicle purchases for the next three years ▲ and establishing a framework for the commercialization of Level 4 (fully) autonomous vehicles.
Jo Cheol, a senior researcher at the Korea Institute for Industrial Economics & Trade (KIET), said, "As the evolution of autonomous driving and connected car technology accelerates, the software definition of vehicles (SDV) and the capabilities in artificial intelligence (AI) are becoming key elements that determine corporate competitiveness," adding that "creating a software-centered ecosystem and enhancing the technology transition responsiveness of parts companies are necessary."
Kim Young-hoon, Deputy Minister of the Korea Automobile Industry Cooperative, said, "Given the limitations on the investment capabilities and workforce acquisition of small and medium-sized parts companies for the transition to future vehicles, a tailored support system needs to be established, including long-term low-interest financing and expanded R&D investment, as well as new employment subsidies."
Automobile parts companies cited major challenges such as 'increased financial burden' (28.2%) and 'concerns about the allocation of tariff burdens' (26.6%). For policy tasks, they pointed to 'tariff exemption and reduction negotiations' (43%), 'responding to export risks due to exchange rate fluctuations' (20.2%), and 'support for local entry' (18.7%).