South Korea introduced a 630 billion won financing program to protect its auto parts industry from growing tariff challenges in the United States. Hyundai Motor Group, Hana Bank, and the Korea Trade Insurance Corporation created this plan to support domestic suppliers. Moreover, the program provides a critical shield for companies hit hard by trade pressures.
At a signing ceremony, officials highlighted the importance of this initiative. Hyundai Motor Group President Sung Kim said the support would stabilize supply chains. In addition, Hana Bank pledged 30 billion won, while Hyundai Motor Group contributed 10 billion won. As a result, KTIC will use these funds to guarantee up to 630 billion won in low-cost loans.
The financing support offers significant benefits. Participating suppliers can access loans with interest rates up to two points below market levels. Furthermore, KTIC extended guarantee periods from one year to three years. It also raised guarantee ceilings for approved loans, giving companies greater room for growth.
DY Auto, a car window motor manufacturer, became the first recipient of this program. Its selection highlights the government’s focus on practical relief for companies at immediate risk. Therefore, the financing support aims to ease cash flow burdens for auto parts producers struggling under new tariffs.
However, the US tariffs continue to weigh heavily on the industry. Earlier this year, the US introduced a 25 percent tariff on car parts. Although the rate later dropped to 15 percent, Korean firms lost the previous zero-tariff benefit under the Korea-US Free Trade Agreement. Consequently, many suppliers saw higher costs and reduced competitiveness.
Hyundai Motor Co. disclosed that tariffs caused major losses in recent quarters. Around 20 percent of its second-quarter losses, worth hundreds of billions of won, came from auto parts tariffs. In addition, the company warned that a new 50 percent tariff on steel and aluminum parts poses further risks.
Because of these pressures, Hyundai Motor Co. now considers shifting parts of its supply chain to local US suppliers. Currently, less than half of the components for Hyundai’s US production come from American partners. This gap leaves Korean suppliers vulnerable to continued tariff policies.
Minister of Trade, Industry, and Energy Kim Jung-kwan toured DY Auto ahead of the signing. He emphasized that the government will prepare additional measures. These include easing export difficulties, exploring alternative markets, providing tax benefits, and improving domestic supply security.
Overall, South Korea’s financing support for the auto parts industry highlights a proactive approach. The program protects suppliers, secures jobs, and ensures stability in a volatile trade environment. Therefore, this support strengthens both the automotive supply chain and the wider economy.
