The history of the automobile industry’s globalization is almost one hundred years. In the industry’s beginning, auto companies began to invest abroad to avoid huge logistics cost. U.S auto companies have led the industry in the direct investment abroad of automobile industry, with Ford having the highest globalization ratio among all auto companies. U.S and Western European auto companies invested in the U.S. and West European countries to grab market share and invested in developing countries to reduce production cost. During the 1970s Japanese auto companies also invested in southeast Asian countries to avoid increasing domestic production cost. Japanese auto companies grew rapidly during the 1970s and exported millions of cars to the United States. At the beginning of 1980s, the U.S government protected the U.S. market and Japanese auto companies began to build ‘greenfield’production facilities in the United States.
Korean auto companies, a late entry into the runner of world’s automobile industry, entered into the global competition for direct investment abroad in the 1980s. But Korean auto companies have retreated from this competition because of a lack of global management capability and bankruptcy of parent companies. Successful restructuring of the Korean automobile industry has allowed for a revival of Korean auto companies. They have invested in China and India each with huge growth potential and acquired experience of foreign operation. Hyundai, Korea’s leading auto company, decided to invest in the United States to avoid trade confliction and exchange rate risk. Kia, a subsidiary of Hyundai, built production facilities in Slovakia to export cars to Western European markets and began to build production facilities in the Unite States.
Increased direct investment abroad of Korean auto companies caused concern of industry’s hollowing-out. But until now, this has not happened in the Korean automobile industry. This study examines the status of globalization of the world’s automobile industry and draws policy implications. In chapter one, we suggest objectives and methods for this study. In chapter two, we provide an analysis the global foreign direct investment envirionment. In chapter three, we examine the current status of Korean auto assembler’s foreign direct investment. In chapter four, we compare the globalization status and strategies of the US, Western Europe and Japanese auto companies. In chapter five, we disscuss the effects of globalization. In chapter six, we propose global strategies for Korean auto companies and suggest policy implications