South Korean vehicle production gained 11.1% year on year (y/y) during October to 405,167 units, according to data released by the Ministry of Trade, Industry, and Energy, and reported by local publication Yonhap English News. Vehicle exports accounted for 259,306 units during the month, up 7.5% y/y. According to the report, Kia was the only automaker to post higher exports, thanks to the success of its Soul, Forte, Rio, Sedona, and Sportage models. All other automakers, including market leader Hyundai, reported a slump in vehicle shipments during the month. The total export value of automotive component parts also slipped 7.5% y/y to USD2.27 billion on weak demand in emerging markets such as Brazil, China, and Russia.
Significance: The rise in domestic vehicle production follows an 18.6% y/y surge in new vehicle sales in the country to 163,529 units during the month. Of this total, sales of domestic brands accounted for 146,106 units, or 89.0%, with volumes up 20.3% y/y mainly owing to a temporary reduction in the special consumption tax for domestically produced vehicles. Controversy over diesel emissions also hurt some imported brands. Exports are likely to remain healthy during the rest of 2015, given the steady/weak South Korean won against global currencies such as the US dollar, which should boost South Korean vehicles' export competitiveness.
