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Project 1st draft Young-Mee Yoo

I. Introduction

The world car industry is one of the largest and most influential in the world, and the current recess in world demand has spread alarm throughout a once profitable industry. Now, the major issues facing the industry are the subject of major new study which examines the fundamental trends in the evoloution of car market over the lase decade, and considers its prospects for survival in the 21st centry.

There is no doubt that the Asiancar industry – especially Korea and Japan – is among the most important {1} in the world car market. An increasing number of governments, are according it the status of a key or spearhead industry, to be preserved and – if possible – rejuven *** ated at all costs. In the face of growing exports from Korea and Japan, many governments hitherto more or less committed to the principles of free trade in manufactured goods are also moving to protect the car firms within their borders {2} . Now even Germany, the major car manufacturing country in the West to set ceilling *** on Japaness import penetration, has followed the line set earlier in the decade by the USA.

Elsewhere in the world, many developing country governments *** are becoming increasingly involved in the car industry too, seeing it as a crucial leading sector capable of throwing off linkages to a range of other domestic suppliers and of taking a leading role in the industriallization process in the economy at large.

II. Asian leading auto country : Korea and Japan

II-1. Japan automobile industry

Japan maintained its rank as the world's second largest producer of motor vehicles following the United States. The country's total domestic output of motor vehicles accounted for about 20 % of world production for the year.

Production

Car production in Japan showed a year-on-year gain of 6.1% in 1997, tataling 10.97 million units. Despite a downturn in domestic sales, overall production scored a second consecutive year of growth, benefiting from a favorable trend in overall exports prompted in part by the strong performance of the world's major markets excepting Asia, where damand plunged due to the currency crisis, and in part by the depreciation of the yen thoughout the year.

Car production

1995 1996 1997

Production 7, 610, 533 7, 864, 676 ( 3.3% growth) 8, 491, 440 ( 8.0 % growth)

Domestic Salces

New motor vehicle registrations dropped 5% in 1997, amounting to only 6.72 million units and marking the first decline in domestic sales in four years. Demand in the frist quarter of the year surged enormously, driven by buyers seeking to beat the increase in the consumption tax that took effect on April 1st. Throughout the rest of the year, the market remained locked in a slump due to the effects of a number of negative factors, including the backrush from the aforementioned rush-in demand, the end of a special cut in income tax, and reduced consumer confidence due to uncertainty in the overall economy. The result was a slump in demand for the year as a whole.

1994 s 1995 s 1996 s 1997 s

Car sales ( % Chg.) 4, 210, 168 4, 443, 906 ( 5 .6 % ) 4, 668, 728 ( 5 .1 % ) 4, 492, 006 ( - 3 . 8% )

Exports

Following a long downtrend, motor exports in 1997 jumped by 22 .7 % to 4, 553, 168 units, marking their first year – on – year growth in seven years.

This growth is attributable to a number of factors, including an economic recovery or the continuation of favorable economic conditions in Europe, Notth America, and other export destinations, as well as the increased demand for sport-utility vehicles and other models theat are not produced by Japaness automakers in overseas plants.

1995 s 1996 s 1997 s

Exports ( % Chg. ) 2 , 896, 216 2, 860, 080 ( - 1.2 % ) 3, 578, 699 ( + 25.1 % )

Exports

Car Market Share by category

In Japan, engine size is the main criterion for dividing cars into categories. Engine displacement for standard cars is 2000cc or more, for small cars 661 – 2000 cc, and for mini cars 600cc and under.

One key characteristic of the Japanese car market is the high poportion represemted by the small and minicar stectors , that is, cars with engine displacement under 2000cc. A second characteristic of the market is standard cars' high share of the imported car market in contrast to their low share of the total markets. A third characteristic is the increasing presence of RV models in the car market.

Small Cars Standard Cars Mini Cars Total Market

1997 s 60 . 1 % 19 . 4 % 20 . 4 % Growth rate ( - 3 . 8%)

Source : Japan Automobile Manugacture Association

II-2. Korea Automobile Industry

Introduction

The growth of Korean car exports in the 1980s owes a considerable amount to government intervention and careful planning over the end of 1970.

Across a wide range of industries, Korean exports have grown exceptionally rapidly since the 1980 s. Electronic consumer goods, cameras and so on. It would appear that, as far as cars are concerned, Korea's share of world trade has merely followed the path illuminated by other industries.

Korean automobile industry has rapidly grown to be the major maker in Asia and in the world since 1980s, and also their domestic market has grown*** too . Then {3} ,*** there is no doubt that Korea *** car market is one of the largest car markets. It would appear that, as far as cars are concerned, Korea's share of world trade – Electronic consumer goods, cameras and so on – has merely followed the path illuminated by other industries.

Since Korea faced {4} with economic crisis, it seems that exports and production were reduced but it would expect {5} to increase in this year.

Automobile Industry's developing step

1. 1981 – 1985 : Preferring for the growth ( Beginning Step )

2. 1986 – 1988 : Growing of the exports à . First, North America exported.

3. 1989 – 1993 : popularizeing of car in domstic market

à Rapidly growth of the domestic sales

4. 1994 – 1997 : matureing in the domestic market

à growth of the domestic sale slow

à rapidly gorwth of exports

Production

Since Asian countires faced with their eocomic crisis, most prouction scale in all indusies has dicreased . In 1998, there were that *** it was caused by reduction of domestic market and car companies' strikes against fire arrangement . But exports market has increased *** .

1995 1996 1997 1998

Production ( % Chg. ) 2 , 605 , 000 ( 15 . 0 %) 2 , 735 , 000 ( 5 . 0 % ) 3 , 300 , 000 ( 20 . 7 % ) 3 , 330 , 000 ( 0 . 9 %)

Domestic sales and exports

As I mentioned at previous paragraph *** *** , at last year , there were several economic problems, with a result domestic sales *** were unexpectedly decreased to minus forty eight percentage .

But in exports *** market was little bit increased *** due to exchange rate *** . However, in 1998, it seems that domestic sales and exports are expected to increase***

On the other side , the fashion of the structure of car demand *** was changed that expects is more than domestic sales since 1998.

1997 1998 1999 ( presumption )

Domestic Sales 1, 513, 000 780, 000 ( - 48. 5% ) 1, 100, 000 ( 41. 0 % )

Exports 1, 317, 000 1, 362, 000 ( 3. 4 % ) 1, 450, 000 ( 6. 4 % )

III. Conclusion : The outlook for Asian Car Industry

Asian car industry : More than ten years have passed since Japanese automakers moved beyond simply supplying knock-down kits for local assembly, which commenced in the 1960s, and began to be actively involved in contributing to the growth of an Asian motor vehicle industry. Local production in Asia has has steadily expanded since then *** guided by a new concept centered on meeting the needs of rapidly emerging middle – income families by locally producing cars to specifically satisfy local requirements.

At the same time that Japenese automakers are accelerating the pace of their localization drive in Asia, they are making comprehensive efforts to contribute to regional economices . They have invested millions of dollars and provided jobs for around 50, 000 local personnal in sales and production. In addition, they are transferring technological expertise through joint wentures , bechnical agreements and the training of local personnel*** and providing crucial wupport for peripheral industries such as metals and electronics.

The world car industry : The fashion of car industry is changing to unite among the big car companies from the end of 1997. But, what an upturn in new car sales in the major markets will not change, however, are the fundamentals of the industry as it approaches the end of the twentieth century. There is no question that the Asian companies' competitiveness will continue to overhang every investment project undertaken in the world market. Indeed, from the end of 1997, there was ominous *** that Korean and Japanese car companies started a round of price cutting, because of exchange rate which caused by their economic crisis *** ***

Bibliography

. Hudson . Schamp (1995) : Towards a New Map of Automobile

Manugacturing in Europe? , Springer.

. Stuart Sinclair (1983) : The World car : the future of the automobile

industry, Euromonitor Publications .

. Korean automobile association magazines ( 1997 – 1998 )

. Japan automobile association magazine ( 1997 . 12. )

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6 ARTICLE - you have made a mistake with the use of the article ( ie a, an, the or zero) with a noun or noun phrase. First check that you know whether the noun is countable or uncountable, and singular or plural

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