Daewoo trucks during the Vietnam AutoExpo in 2012. The company has scaled back production and closed one plant. Photo: AFP/Hoang Dinh Nam

South Korea, the fifth-largest automaker in the world by sales only two years ago, slid to seventh place last year, according to data released by the Korean Automobile Manufacturers Association (KAMA) on Sunday.

China was the No 1 manufacturer in 2018, followed by the United States, Japan, Germany, India, Mexico and South Korea, KAMA found, as reported by Yonhap news agency. South Korea – home to global brands Hyundai, Kia, SsangYong, GM Daewoo and Renault Samsung – had held the fifth-place ranking between 2005 and 2015, before falling behind India, and more recently Mexico, in the last three years.

South Korea-based carmakers churned out 4.03 million vehicles in 2018, accounting for 4.1% of global automobile production, according to KAMA data. That number was down from 4.12 million vehicles in 2017, 4.23 million in 2016 and 4.56 million in 2015.

Internationally, South Korean automakers have been hit by falling exports as global demand fell – a problem that led, at least in part, to the closure of a GM Daewoo manufacturing plant in the town of Gunsan in 2018.

Domestically, they have suffered from high wages and militant unions. In particular, Hyundai Motor’s unionists are known as “The Aristocrats of Labor” in South Korea, because of their high wages and generous working conditions. They have struck every year since 2012.

As a result, and in a long-term trend, South Korean carmakers have been moving offshore to locations including Brazil, China, Eastern Europe, India, Mexico, Russia, Turkey and the United States.

A staffer from KAMA, a body that represents carmakers, told local media that Korea’s declining ranking was due to the confrontational relationship between labor and management, plus high labor costs and low efficiency at assembly lines.

Auto exports are a mixed bag, KAMA found in separate data published last week. It found that while the number of vehicle exports had fallen 1.6% last year, unit costs of those exports had risen by the same figure, 1.6%, largely on the pricier sport utility vehicles, whose export numbers rose 6.7% over 2017’s numbers. SUV demand globally has spiked as a result of low oil prices over the last three years.

But regardless of pricing, the overall export volumes of South Korea-made cars has been declining since 2012, KAMA found.

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