How One Small Car Helped Save South Korea

How One Small Car Helped Save South Korea

Why you should care

Because sometimes the smallest things have the largest consequences.

If you’d seen the Hyundai Pony trundling down the streets of Toronto, Cairo or Seoul in the early 1980s, you probably wouldn’t have looked twice. Packing a less-than-whopping 1.2-liter engine, the subcompact car was perhaps best for getting drivers from one point to another with little fanfare. But at the time, it was anything but ordinary for most South Koreans.

Before K-pop, cellphones and flat-screen TVs, there was the Hyundai Pony. Unbearably boxy by modern standards, the automobile in many ways heralded South Korea’s emergence onto the car industry’s world stage. While it wasn’t much to look at, the Pony was the first Korean-made car the country ever exported, laying the groundwork for an automotive industry that would later help transform the South Korean economy into one of the world’s biggest.

The country was essentially starting from nothing. After the Korean War, which left nearly 1 million citizens dead, wounded or missing, the nation lay in tatters. With a hungry population and a barely functional economy, few expected much from South Korea in the 1960s. “Their per capita income was lower than even many African countries,” says Martin Hemmert, a professor of international business at Korea University in Seoul.

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Poised for success: Newmarket Mayor Ray Twinney, left, and South Korean Consul-General Dong Woon Chu sit on a Pony after viewing the industrial park site where the car’s maker, Hyundai, planned to build a $25 million parts plant in Ontario, Canada, in 1985.

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That’s probably what makes Hyundai’s saga, which is closely associated with the personal story of the Chung family, all the more impressive. Growing up poor, future Hyundai founder Chung Ju-yung ran away from home after finishing elementary school, funded by cash he’d stolen from his father’s fund for his sister’s wedding. Finding work in Seoul as a construction laborer, Chung gradually moved through owning a number of small businesses before winning international construction contracts during the Korean War. Based on successful projects for the U.S. Army and the United Nations, Chung founded the Hyundai Construction Company — Hyundai roughly translates to English as “modernity” — in 1953.

The rise of President Park Chung-hee in the early 1960s and his statist economic policies were a turning point for South Korea. He handed growing family businesses such as Hyundai, as well as future conglomerates LG and Samsung, tax breaks and other forms of generous government support. By 1960, Hyundai was Korea’s largest construction firm, and soon it was launching major building projects throughout the Pacific region. The next goal in Chung’s sights was the automotive industry, and in 1967, the Hyundai Motor Company was born and chaired by his brother, Se-yung.

The country’s newfound economic and technological prowess also produced a booming defense industry — which in turn helped guarantee its security from an increasingly belligerent regime in North Korea.

To be sure, they got a little help from friends. In the early 1970s, Ford hired Hyundai to assemble its cars in a partnership that helped train cadres of Korean workers. When that relationship fell apart, Hyundai looked east for a new partner — Japan’s Mitsubishi — and hired a group of senior European engineers to guide the way toward the production of a curious-sounding item ordered by the government: a “citizen’s car.” Many, both at home and abroad, were skeptical that Hyundai could pull it off. But with fresh training and bold leadership, they did just that. “No market research had been done,” wrote Richard Steers in his 1998 book, Made in Korea: Chung Ju Yung and the Rise of Hyundai. “Chung and his company had simply designed and built the car they thought the Korean people should have.”

Although designed by an Italian firm, and featuring an engine and four-speed transmission built by Mitsubishi, the Pony was fully produced in Korea by local builders and technicians. It first rolled off the line in late 1975 and was exported to Latin America — Ecuador, of all places, received the first exported Ponies — followed soon after by the Middle East, several European countries and, in the early 1980s, Canada. There, it eventually skyrocketed in popularity. “That was a big deal,” says Hemmert. “They were rubbing their own eyes, saying, ‘Hey — we export cars now.’” In South Korea, meanwhile, the Pony at one point reportedly accounted for three out of five cars sold before production ended in 1989. The original version, however, was never offered in the U.S.

Hyundai’s achievement was a fundamental part of the vast economic transformation that later became known as the “Miracle on the Han River.” According to Chun Seung-hun, president of the Seoul-based Korea Institute for Development Strategy, the country’s newfound economic and technological prowess also produced a booming defense industry — which in turn helped guarantee its security from an increasingly belligerent regime in North Korea.

But arguably more important may have been the psychological boost it gave the fledgling nation. “The success of Hyundai and other conglomerates gave us pride and confidence in the Korean people,” says Chun. As for anyone who might’ve had a chuckle at the Pony’s expense? They’re almost certainly not laughing now.

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