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Recent Korean cars have first class design, materials and build quality. They are also being styled and built in the U.S. Furthermore, South Korea, and especially Seoul, have expensive cost of living. So where are they finding the cost savings to be able to sell a more heavily contented vehicle for less than a comparable domestic or Japanese model? I'm assuming that their U.S. plants are non-unionized and pay similarly to the Japanese plants.
Are the Koreans willing to realize a much smaller profit margin per unit? Much lower compensation for upper management? More efficient company?
Also their plants in the US (where most of their cars available in the US are manufactured) are brand new, state of the art facilities designed for maximum efficiency. They are some of the most automated auto plants in the world. I'm sure it's quite a bit cheaper to make a car there than a similar car in a very old facility with many manual processes.
one reason, is economies of scale. South Korea (POSCO) has the world's largest, and most advanced, steel manufacturing facility in Gwangyang. Not too far away in Ulsan, South Korea has the world largest automobile manufacturing facility. (In the same town, S. Korea also has the world's largest oil refinery, and the world's largest shipbuilding facility).
this steel advantage is important. little old South Korea produces over 50% of the world's ships, via Hyundai, Samsung, and Daewoo. That requires a lot of steel, and gives stability and cost advantage to a producer like POSCO. These cost advantages are passed on to the auto industry.
Also, you have to consider that in such a small country like S. Korea, national laws are set up to support its "export champions." It is hard for a nation like India, China, or the US, with competing interests from other industries, to maintain such a politically-driven economic advantage for autos.
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Originally Posted by OrangeAndBlue
Also their plants in the US (where most of their cars available in the US are manufactured)
Can you confirm this with a source?
From my research, Kia and Hyundai have the overwhelming majority of their manufacturing capacity in Korea. It seems that these two firms have one plant apiece in the US, in Georgia and Alabama, respectively. These two US plants do not appear to produce a high number of vehicles, either - 300,000 vehicles/year apiece. That aforementioned Korean factory in Ulsan produces 1.6 million vehicles/year.
They are not plagued with the UAW, so they get good quality labor at a fair price. The UAW won't allow much state of the art equipment at their plants, so you must take a gamble in getting anything that resembles quality from a Detroit car.
S. Korea has very active autoworkers unions, like the US.
Indeed, I wouldn't be surprised if the Koreans, like the Germans, built plants in the American south because they see it as a source of cheap, compliant labor. You know, the way American manufacturers look at Mexico.
I wonder how many Americans realize the Koreans and Germans hold Americans in such contempt? And that it may be justified.
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