This study comprises a historical analysis of the Korean automobile history since 1997, and describes the implications for  hefuture development of the industry carried by the analytical findings. The focus of the automobile industry shifted from quantitative qualitative growth in 1997. Since then, the industry has rarely increased its production capacity, and so in this study we define the period up to 1996 as the period of quantitative growth. Due to the side effects of rapid quantitative growth, the industry has undergone severe restructuring since 1997. Automotive sales and production fell sharply following this restructuring, which took place in the aftermath of the Asian Financial Crisis and the ensuing International Monetary Fund (IMF) bailout of the Korean government. But the restructuring efforts were successful, and Korean automakers quickly recovered. 

The industry did experience some quality problems in the wake of  the  restructuring, but it has actively tried to solve them. In the 2000s, Korean carmakers established innovation-oriented strategies that sought to improve quality. As a result, significant improvements to quality were achieved by the late 2000s. Domestic automobile production has been on the decline since 2011, but overseas production grew rapidly up to 2016. In addition, free trade agreements (FTA) signed with various countries have led to increased exports. This period can be seen as the period of expansion of the overseas market of the Korean automobile industry. However, overall automobile production has continued to decline since 2011, including overseas production, and especially production in the Chinese market since 2017. The global automobile market is currently undergoing a paradigm shift driven by the development and release of more environmentally-friendly vehicles and self-driving technologies. In order for the Korean automobile industry to survive this paradigm shift, it will be necessary for Korean manufacturers to enhance the competitiveness of their eco-friendly cars, improve quality, and diversify and upgrade their model ranges. To realize this, innovative management strategies, effective government policies, efficient R&D, and strong competitiveness in the parts industry are needed. However, labor disputes in the Korean automobile industry and the polarization of both parts industry firms and OEMs pose problems for Korea in the future. In addition, the disconnect between Korea’s advanced IT industry and the automobile industry is also a problem. The ongoing paradigm shift may enable the continued development of the automobile industry in the future if Korea presses its advantages and compensates for its weaknesses. Smart factories are key to this, but it takes time for such facilities to come online, and require careful planning, design, and execution. Yet Korea possesses deep reserves of production knowledge and know-how, which should be of great help in the transition to the production system of the future. In addition, Korean auto manufacturers have excellent automotive design capabilities, which may come to represent an even more important advantage as design is expected to become more important than ever in the era of electric and self-driving cars. A strategy to make Korea a global design and R&D base is needed. 

The government should promulgate future vision and establish appropriate policies. And importantly, it is necessary for the government to actively support parts manufacturers in the shift to future cars. In order for future mobility to be realized and developed, the government’s efforts to create market demand will be needed. Future cars, such as eco-friendly vehicles and self-driving cars, require cooperation by multiple firms in the value chain. It is thus essential to create an ecosystem where cooperation between domestic industries can take place. Moreover, cooperation between unions and workers is absolutely necessary to successfully carry out the transition to future cars. And in order to increase automobile sales in the Chinese market, the development and production of differentiated products tailored to Chinese consumer tastes should be prioritized. In the future, automobiles from Chinese OEMs are likely to challenge Korean companies not only in the Chinese market but also in the global market. In order to cope with this, government and industry should bettermonitor the Chinese automobile market.