South Korea has released information that its government will provide KRW 3.5 trillion (US $3.1 billion) to promote electric vehicles and give auto parts makers financial support.
As part of the package, South Korea will launch a new credit guarantee for KRW 1 trillion (US $885 million) bonds issued by suppliers and will extend the maturity of US $1 billion in loans to local suppliers of GM’s South Korea unit.
The auto components industry is 7 percent of South Korea’s GDP and employs 235,000 people, or about 7 percent of the manufacturing sector. The Korea Automobile Manufacturers Association and the Korea Auto Industries Coop Association welcomed the decision as member companies are facing financing and low utilization rates. The suppliers are reportedly facing tighter operating margins and the number of those losing money is increasing. GM’s South Korean subsidiary closed one of its plants earlier in 2018, and Hyundai Motors has announced smaller profit estimates.
The South Korean finance ministry announced that it provided a six-month extension on a 30 percent cut in consumption tax for passenger cards for H1 2019 and increased target for use of electric cars in the country to 430,000 vehicles from 350,000 by 2022, up 23 percent. It also plans to expand subsidies on electric and hydrogen vehicles.