South Korea establishes its place in the world’s top vehicle producers
Producing over four million light vehicles a year, South Korea is the world’s sixth-largest automotive manufacturer and could soon overtake Germany for fifth. Here’s how Hyundai, Kia, GM Korea, Renault and KGM are shaping its future.
South Korea produced just over four million light vehicles in 2025, making it the sixth-largest vehicle-producing country in the world, behind China, the USA, Japan, India and Germany. It may overtake Germany this year as EV production at Kia ramps up and German volumes decline. Korea is also likely to maintain its lead over seventh-placed Mexico, which faces production losses due to US import tariffs, though the arrival of Chinese manufacturers in Mexico could change that dynamic.
Korea’s domestic market totals around 1.7m units annually, far smaller than its production base. Some 81% of vehicles sold locally come from domestic factories, with BMW, Mercedes and Tesla the only imported brands holding more than a 3% market share. The economics have already prompted Honda to exit the Korean market, and other minor brands may follow.
The Hyundai Group, covering Hyundai, Kia and Genesis, accounted for 84% of production in 2025. GM Korea is the second-ranked producer with around 11% of output, followed by KGM (3%) and Renault (2%). With new models planned, Renault is expected to overtake KGM within the year.
The Hyundai Group: Leading on EVs and long-term investment
Hyundai and Kia each account for roughly 40% of Korean production, with Genesis contributing around 5%. Kia is currently ahead of Hyundai in EV launches and is expected to overtake Hyundai in production terms this year. However, Hyundai’s Ioniq range is expected to be as comprehensive as Kia’s EV line-up. A key strategic question will be how much future EV production takes place in the regions where vehicles are sold, rather than in Korea. Kia already produces the EV2 and EV4 in Europe and reports suggest a smaller model, likely the EV1, will also be built there. Hyundai recently launched its newest EV, the Ioniq 3, from its Turkish factory.
At the macro level, Hyundai Group has launched an investment programme worth over $85 billion in advanced manufacturing in South Korea, to be completed by 2030
The group operates two major manufacturing hubs in Korea. The Ulsan complex, shared by Hyundai and Genesis, has a nominal capacity of around 1.5m units across five factories. A new all-electric plant within Ulsan began construction in 2023, with pilot production starting in the second half of 2025; it will have dedicated capacity for 200,000 EVs and is Hyundai’s first new domestic plant in nearly 30 years. Smaller sites at Asan and Jeonju handle larger passenger cars and commercial vehicles respectively.
Kia’s main plant at Hwaseong has capacity exceeding 600,000 units a year. Its satellite facilities at Gwangmyeong and Gwangju support additional production, and recent investment has focused on Kia’s Purpose Built Vehicle (PBV) programme. Two new PBV factories – the East Plant (already in production) and the West Plant (due 2027) – will together handle 250,000 units. The first vehicle is the PV5, a compact electric van built on a flexible platform that can be adapted in length and body style.
At the macro level, Hyundai Group has launched an investment programme worth over $85 billion in advanced manufacturing in South Korea, to be completed by 2030. The investment covers AI, software-defined vehicles, electrification, robotics and hydrogen ($34.6 billion), new products and core technologies ($26.4 billion) and capital expenditure on production facilities and a new Global Business Centre in Seoul ($24.8 billion). The group is targeting exports of 2.5m vehicles a year by 2030, up from 2.2m in 2024 with electrified vehicles (EVs, PHEVs, HEVs and FCEVs) rising from 690,000 to 1.76m units annually.
GM Korea: Turnaround complete, expansion under way
GM Korea’s recent story is one of remarkable recovery. In 2018, the company required a substantial government capital injection – channelled through the Korea Development Bank, which holds 17% of the business – just to survive after closing its Gunsan factory. In April this year, GM Korea announced it would pay a dividend for the first time since 2018. Having returned to profit in 2022, its 2024 profit of 2.2 trillion won was more than ten times its 2022 result of 210 billion won. Cash reserves are now estimated at nearly 3.2 trillion won (approximately $2.2 billion).
GM appears firmly committed to its factories at Bupyeong and Changwon, where production costs remain attractive for US supply even accounting for tariffs and logistics
GM Korea is unusual in that it exports almost everything it makes, primarily to the US. The Chevrolet TrailBlazer saw exports of nearly 151,000 units last year and the Trax around 297,000, compared with fewer than 16,000 GM vehicles sold domestically. The Trax export volumes include the Buick-badged Envista while the Trailblazer numbers include the Encore GX. Around 90% of Trax exports – some 265,000 units – went to the US.
Having produced around 450,000 vehicles last year, GM Korea plans to reach 500,000 this year. That expansion will proceed despite the rise in US tariffs on Korean vehicles from 2.5% to 15%. GM appears firmly committed to its factories at Bupyeong and Changwon, where production costs remain attractive for US supply even accounting for tariffs and logistics. Under the terms of its 2018 rescue agreement, GM cannot sell its stake in the Korean operation nor close any plant until 2028 at the earliest. It has also committed $600m to upgrading its Korean facilities.
Renault Korea: A new strategic direction with Geely
Renault acquired an 80% stake in Samsung Motors in 2000 and rebranded it as Renault Korea Motors in 2022. Shortly afterwards, Geely took a 34% stake, buying shares from both Renault (whose holding fell to just under 53%) and Samsung (whose stake dropped from 19.9% to just over 13%). Geely has replaced Nissan as the technical foundation for Korean-built Renault models; its platforms now underpin the Grand Koleos and Filante hybrid SUVs. The Filante is positioned as a new premium Renault product destined for global markets, though not Europe or the US.
The operation has also taken on production of the Polestar 4, transferred from China to Korea to avoid EU tariffs on Chinese-made vehicles. Renault’s CEO confirmed in early April that production of Renault-branded models in Korea will expand, including EVs. Renault does not plan to manufacture batteries in Korea, nor use Chinese batteries; instead, it will source from Korean suppliers such as LG.
The company [KGM] has recently announced a co-operation agreement with Chery of China on software-defined electric vehicles focused on mid-to-large SUVs
KGM: Profitable again and launching new models
KGM – formerly SsangYong, now part of the KG Group following Mahindra’s exit in 2022 – is Korea’s fifth and smallest vehicle manufacturer. After an uncertain period financially, it has returned to profitability. Last year it reported an operating profit of approximately 362 billion won ($24.5 million), a four-fold increase on 2024. The company makes pick-ups and SUVs at its factory in Pyeongtaek, near Seoul, with production last year totalling just over 100,000 units. Output is expected to fall by around 6,000 units in 2026.
Some 65% of KGM’s vehicles are exported, with the Middle East and Turkey accounting for 30% of overseas sales, Western Europe around 25% and Eastern Europe slightly less. Asia-Pacific (led by Australia) and the Americas make up the balance. The company has recently announced a co-operation agreement with Chery of China on software-defined electric vehicles focused on mid-to-large SUVs. Its first product under this partnership, the SE10, is due later this year alongside an all-new Musso pick-up, codenamed Q300, and described by KGM as a sports utility truck.
