Saturday, May 19, 2007

The Early Years: Korea's Car Industry

A 1962 Korean Sae Nara

I found this history on the very early years of the Korean car industry informative. It's written by Andrei Lankov, a Russian born historiam teaching in Seoul, Korea. Dr. Lankov is an aquaintance, I respect. When we compare these early models with the current cars, SUVs, and vans produced by Hyundai and Kia, we begin to see how far the Korean car industry has come in 50 years. BTW I've also added a few relevant comments in the text.

Dr. Lankov notes...
When in October 1955 crowds of Koreans came to see the Industrial Exhibition in Seoul, their attention was grabbed by a boxy blue car which looked more or less like a military Jeep, so ubiquitous in the Korea of those days. Indeed, it was a Jeep, but quite a special one.

This car was locally assembled and some of its parts were produced in Korea. This was seen as a beginning of the Korean automotive industry, and the car itself was not known the Sibal (Start) for nothing.

But Sibal did not stay in production for long, and around 1959 the company which produced the first Korean car switched back to maintenance and repair work. The Korean market was too small to sustain a modern car company.

The situation was complicated by a government decision to keep the number of vehicles at the same level. This policy, effective over the years 1956-1962, meant that a new car could be registered only when another car was deemed unusable and lost its registration.

This replacement principle was introduced to save hard currency which was in short supply. But it killed the first Korean experiment in car building.

Nonetheless, more experiments followed in the 1960s. For the Korean motor industry, the 1960s were the decade of trials. No major breakthrough was achieved, but engineers and workers were learning how to make modern vehicles, while the business community and government worked out the ways of managing the new industry.

In May 1961, the military coup brought to power the government of General Pak Chong-hee, arguably the most successful administration in Korean history. It presided over the transformation of Korea from an exceptionally poor Third World country to a modern industrial state.

As we know, the automotive industry became one of the major engines of Korea’s growth, but this happened only later. In 1961 few people thought that Korea, in the foreseeable future, would be able to produce cars in large quantities.

On January 29, 1962, a group of ethnic Korean businessmen from Japan, presided over by Park No-jon, established a Sae Nara (New Country) motor company. They reached an agreement with Nissan, the Japanese car giant, and received permission to locally assemble the Nissan Bluebird, one of the company’s most popular models. The kits were provided by the Japanese partner, but the car carried the Korean name Sae Nara. [ knock downs had no import tax, too]

The car looked and felt modern and sophisticated, unlike the boxy Sibal. The plant could produce up to 6,000 cars a year, but this level was never reached. In July 1963 the plant was closed down after merely one year of operation.

The official explanation was that it proved impossible to work out the appropriate hard currency exchange regime, but some people suspected that the company owners did not provide a secret political fund to the government and were punished for their stubbornness. Whatever the reasons, Sae Nara managed to produce only 2,773 cars.

Around the same time, Kia, then a humble producer of bicycles, decided to enter the new industry as well. Taking into account their own experience with bicycles, Kia managers bought from Japan a license to produce motorbikes and motor tricycles. [ actually Kia entered the motorcycle business in the late 1950s].

A motor tricycle might appear somewhat strange to a modern eye, but such contraptions were a common sight on Korean roads until around 1980. There was a great variety of them, and Kia was not the only producer.

The assembling of new cars from cannibalized old vehicles also continued on a large scale. Sinjin in Pusan was especially prominent in this business, producing buses from old American military trucks. In November 1963, merely a few months after Sae Nara closed its plant, the Pusan-based company managed to produce another Korean car which was called by yet another optimistic name: Sinsong, or New Star.

This car had good modern looks, and this made the Sinjin engineers proud since the car body was designed and produced locally. Under the bonnet, however, there was the good old engine of the American Jeep, by far the most common passenger vehicle in Korea in the early 1960s.

Obviously, the owners of the Sinjin knew when to make an appropriate contribution to political funds, since they stayed in operation, and in November 1965 were allowed to purchase the plant of Sae Nara which had remained idle from 1963.

The expensive purchase was financed by a loan from a state bank. This time, the plant was used to assemble cars from kits provided by another Japanese giant, Toyota. Sinjin assembled the Toyota Corona, another popular model of the era. The quality was good, and Korean customers were ready to buy the new cars. {Again, knock-downs had no import taxes, and were very profitable. In fact, Kia and GM Korea soon were involved heavily in knock-downs, linking up with global producers].

Of course, we are talking about the privileged few, since for the vast majority of the population car ownership was not even considered in those days. Nonetheless, in 1966 the plant produced 3,117 units, and the next year production increased to 5,310. Together with Kia, they produced 6,604 vehicles in 1967.

But, frankly, these were insignificant figures. In 1967, the major countries counted their production in the millions (Japan, for example, in 1967 produced 1,376,000 cars and an even larger number of trucks). Few people in the late 1960s expected that Korea would soon join the club of major car producers. Nevertheless, this is what eventually happened.

I'd like to thank Dr.Lankov for the great research. BTW BCW has lots of info on the early years (1960-1970s) of Hyundai, Kia, and GM Korea (which eventually became Daewoo Motors> and now GM Daewoo), etc...

Look to future Blogs on my insights// DS

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