KOTRA, Hyundai Motor and Kia join forces to help parts suppliers break into global automaker supply chains

KOTRA has teamed up with Hyundai Motor and Kia to help South Korean auto parts suppliers break into the supply chains of global automakers. The initiative aims to connect technically capable domestic parts makers — many of which have struggled to find overseas buyers — with new international customers at a time when auto parts exports are slowing.

The Korea Trade-Investment Promotion Agency (KOTRA) announced Thursday that it signed an MOU with Hyundai Motor and Kia on Wednesday to support domestic parts suppliers' entry into overseas markets.

The agreement is designed to broaden the export base for South Korean auto parts companies. The two sides plan to combine KOTRA's overseas network with Hyundai Motor and Kia's expertise in identifying and managing partner firms, helping domestic suppliers gain entry into the supply chains of global automakers.

Auto parts are a key intermediate export for South Korea, but recent trends diverge sharply from those of finished vehicles. Last year, automobile exports hit a record $72 billion as carmakers diversified into markets including Europe, while auto parts exports fell 6 percent year-on-year to $21 billion. In the first half of this year, auto parts exports totaled $10 billion, down 6.3 percent from the same period a year earlier.

Shifts in the global trade environment are adding to the pressure on parts suppliers. The United States said in a joint fact sheet from last year's Korea-US summit that it would lower Section 232 tariffs on Korean-made vehicles and auto parts to 15 percent, but pressure to manufacture and source locally in the US continues to grow. For parts suppliers, broadening their customer base — rather than depending on a single automaker or a single market — has become an increasingly critical strategy.

As the first joint initiative under the MOU, KOTRA and Hyundai Motor and Kia will hold supply chain consultation events in Detroit. A "Ford-Korea Parts Supplier Day" is scheduled at Ford's headquarters on Tuesday, followed by a "Stellantis Innovation Tech Show" at Stellantis headquarters on July 16.

Forty-four of Hyundai Motor and Kia's top-tier partner suppliers will take part. KOTRA and Hyundai Motor and Kia jointly identified domestic companies based on specific parts demand from the global automakers, with Ford and Stellantis making the final selection of participating firms.

At the events, purchasing managers from the global automakers will meet directly with South Korean parts suppliers to discuss potential cooperation. Organizers said the consultations are grounded in actual procurement needs — not simply exhibitions or promotional showcases — which they said improves the chances of suppliers actually entering the supply chains.

Briefing sessions on US market entry strategy will also be held alongside the consultations. KOTRA and Hyundai Motor and Kia plan to run a "US Automaker Procurement Policy Briefing" to help domestic parts suppliers understand local purchasing policies, quality and certification standards, and delivery procedures.

KOTRA said it intends to use this collaboration as a model for expanding joint overseas ventures between large companies and small and midsize parts suppliers. If Hyundai Motor and Kia's partner firms can leverage their domestic supply experience to win customers among overseas automakers, the export foundation of South Korea's auto parts ecosystem could be significantly strengthened.

Support will extend beyond the United States in the second half of the year. KOTRA plans to arrange consultation opportunities with automakers and parts companies in major automotive markets including Europe and Japan, helping domestic suppliers diversify their sales channels.

"This MOU with Hyundai Motor and Kia is highly significant in that it brings together both companies' global networks and overseas marketing support capabilities to create a model case of large and small businesses growing together," KOTRA President Kang Gyeong-seong said. "KOTRA will continue to create supply chain entry opportunities in Europe, Japan and other markets in the second half of the year, and will further strengthen its support to help auto parts companies facing difficulties expand their exports."