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Analysis Area: Daegu Metropolitan City

Core Area: Seongseo Industrial Complex, Dalseong Industrial Complex, Daegu National Industrial Complex, Intelligent Automotive Parts Promotion Agency, and densely populated area of ​​automotive parts companies

Agenda:  Are internal combustion engine-centric automotive parts companies actually shifting to SDV, electrification, AI, and autonomous driving supply chains?

Golden Time Type: Industrial Displacement Risk + Supply Chain Transition

Reference Date: August 28, 2026

Version: Regional AX Golden Time Intelligence v3.2
 

The automotive parts industry accounts for 25.4% of Daegu's manufacturing value added, and 12 of the top 100 domestic automotive companies based on 2022 sales were located in Daegu. As engines, intake/exhaust systems, and fuel supply systems disappear in electric vehicles, and as vehicle functions and value added shift to software, semiconductors, and data in SDVs, the scale of Daegu's core industries and their position within the future value chain have begun to diverge. Data tracking the sales proportion of local companies in electrification, electronics, and software is not available, and if the supply chains for automakers' next-generation platforms become fixed within two to three years, the entry costs for latecomer transition companies will skyrocket. While Daegu's automotive parts industry is strong in current scale, its position within the future vehicle value chain has not yet been re-established.

The Ministry of Trade, Industry and Energy's investment in the automotive industry for 2026 amounts to 464.5 billion won , and in the autonomous driving sector, multimodal E2E-AI, national standard-based SDV, open-source AI-SDV platforms, and automotive semiconductors have been included as new targets for support. Although the unit of competition has shifted from individual component performance to vehicle operating systems and software compatibility, Daegu's representative transformation projects remain concentrated on support for motors, electronic components, testing and evaluation, and business restructuring.  In-house software development, OTA response, vehicle data utilization, and participation in global OEM platforms by local companies are observed only to a limited extent. If companies centered on mechanical components fail to enter the system and software supply chain by 2028–2029, they will remain latecomers once again in the SDV stage following electrification. While Daegu's transition to future vehicles has begun, the scope of progress toward the SDV transition remains narrow.

The Daegu Future Vehicle Transition Comprehensive Support Center, launched in 2022, provided support for business restructuring consulting, prototype production, win-win packages, and market development. In 2023, through support for 22 companies, it recorded commercialization revenue of 6.14 billion won and created 70 new jobs , while the cumulative results disclosed in 2026 showed commercialization revenue of 32.2 billion won and 180 new jobs . Although the support system has shifted from consultation to the stage of actual commercialization revenue and job creation,  it has not been separated whether these achievements represent the expansion of sales channels for existing parts or new revenue from electrification and SDV components.  If only total revenue is accumulated over the next two to three years, the depth of the future vehicle transition and the extension of existing businesses will become intertwined.  While the economic results of corporate support are confirmed, the achievements of structural transformation remain only partially verified.

Daegu has been selected for the Ministry of Trade, Industry and Energy's SDV Electronic Components Security Evaluation Center construction project and is establishing a cybersecurity evaluation infrastructure for automotive electronic components. Although the scope of automotive component evaluation has expanded from mechanical performance and durability to software vulnerability, communication security, and update safety,  there is no confirmed track record of local companies internalizing security design and software development.  If the use of the evaluation center remains limited to testing procedures after product development, software capabilities at the design stage will remain with external suppliers. If compliance with UNECE requirements for vehicle cybersecurity and software updates becomes standardized by 2028, the difference between passing tests and possessing in-house design capabilities will translate into a gap in securing orders. While  Daegu is securing an SDV evaluation infrastructure, its SDV development infrastructure remains unconfirmed.

Daegu is promoting a specialized complex for mobility motor materials, parts, and equipment, as well as the evaluation of electrification module components and a CAV-based autonomous driving evaluation platform. While physical testing infrastructure has expanded to facilitate the shift from an internal combustion engine-centric parts industry to drive motors, electronics, and autonomous driving components,  the percentage of local parts companies that have transitioned into dedicated future vehicle parts manufacturers has not been disclosed. Surveys indicate that by 2026, the national automotive parts industry will comprise approximately 21,000 businesses, 456,000 employees, and 207.6 trillion won in revenue, yet there are only 578 companies dedicated to future vehicles . There is no evidence that Daegu has escaped the dual structure of a majority of existing parts companies and a small number of transitioning firms.  Although the infrastructure has expanded, it is still difficult to assess the speed of corporate transition as a reflection of the overall industrial transformation.

Demand for drive motors, inverters, power converters, and thermal management components is increasing alongside the proliferation of electric vehicles, and Daegu is establishing a motor-specialized complex and an evaluation infrastructure for electrification modules. While this represents a path for internal combustion engine parts companies to transition to new physical components, the competitiveness of SDVs is formed through software architecture, vehicle communication, and data and update systems.  Regional statistics distinguishing between sales of electrification components and software sales are not available. If only electrification is counted as the transition to future vehicles until 2028, Daegu companies will lag behind in the software shift of vehicle value, even if they can adapt to changes in the powertrain.  Although Daegu's transition to electrification has become visible, its transition to SDVs is considered to be in its early stages.

With the implementation of the Future Automotive Parts Industry Act in July 2024, software was included within the scope of future automotive technologies and parts . Although the institutional boundaries of automotive parts companies have expanded from mechanical and electrical components to include software firms, the structure for identifying joint orders and joint development between software companies and existing parts companies in Daegu's corporate support and industrial statistics remains limited. If the scope of support is merely broadened without the formation of actual business relationships over the next two to three years, this institutional expansion will not lead to the restructuring of the regional supply chain. While  Daegu's automotive parts ecosystem has expanded into SDV under the legal definition, internal integration within the industry remains unconfirmed.

This is evidence that economic performance has occurred in the supported companies. However, compared to the scale in which Daegu's automotive parts industry accounts for 25.4% of manufacturing value added, the scope of these results is too small to represent the speed of transformation for the entire regional industry. Furthermore, no data has been found that presents the number of supported companies, the total number of target companies, and the distribution of non-transformed companies using the same criteria. If only the cumulative disclosure of successful companies is made by 2028, under-prepared companies outside the support system will disappear from the statistics.  What has been confirmed so far is the commercialization performance of selected companies, not the transformation rate of the entire industry.

A survey of automotive parts companies in Daegu and Gyeongbuk revealed that  57.1% possess plans to respond to future vehicles . While more than half have expressed an intention to transition, there are still stages of technology development, certification, mass production, and order acquisition remaining between possessing a plan and generating revenue from new products. The latest regional panel tracking individual companies' response stages and revenue conversion rates is not available. If companies with plans fail to move toward securing mass production orders within two to three years, their intention to respond does not translate into asset investment or workforce transition.  Although awareness of the transition has spread among parts companies in the Daegu region, the depth of its implementation remains unclear.

Although Daegu is home to 12 of the top 100 automotive companies, there are no local finished vehicle assembly firms.  While numerous parts suppliers exist, the end-users determining vehicle platforms and software architectures are located outside the region, resulting in a structure that relies on external automakers for SDV development specifications and access to data . The extent to which local companies participated in the joint development of next-generation platforms by automakers is not confirmed in publicly available data. Once a centralized electrical and electronic architecture and software supply chain are finalized by 2028, it will become even more difficult for individual component suppliers to enter the market. While  Daegu possesses strong parts manufacturing capabilities, its access to SDV design rights and platforms remains weak.

The Future Vehicle Transition Win-Win Package supports the formation of consortia by small and medium-sized enterprises (SMEs) and mid-sized companies. While cooperative structures among companies are being established, evidence that automakers, Tier 1 suppliers, software companies, and semiconductor companies are connected by identical product roadmaps and purchasing contracts is limited.  Joint development without confirmed demand does not guarantee mass production revenue, even if it can produce prototypes and patents. If R&D consortia and supply contracts become separated over the next two to three years, there is a high risk that the project will be discontinued after support ends.  Although a foundation for collaboration exists in Daegu, the transition to a supply chain where demand companies are tied down remains unconfirmed.

Daegu possesses the Intelligent Automotive Parts Promotion Agency, an autonomous driving evaluation platform, and centers for evaluating electrification module components and SDV electronic components security. While the infrastructure for verifying components developed by local companies in terms of performance, safety, and security has been strengthened,  local development achievements in automotive operating systems, middleware, E/E architecture, and OTA platforms remain unconfirmed.  Even with an increase in testing and evaluation, the region remains stuck in the certification and hardware production stages as design specifications and software reside externally. By 2028–2029, repeated re-verifications will occur with every software change, leading to the accumulation of costs associated with dependency on external platforms.  Although Daegu is growing as an evaluation hub, it lacks the evidence to be recognized as an SDV design hub.

Cybersecurity for SDV electronic components is determined by the vehicle's entire network and update system, rather than the vulnerability of a single component. Even if component-level evaluation centers are established, it is difficult to reproduce risks at the actual vehicle level without securing an integrated verification environment linked to the vehicle's operating system.  The scope of mutual recognition between global OEM standards and regional evaluation infrastructure is also not clearly confirmed.  If domestic testing and overseas delivery certification become redundant over the next two to three years, the burden of costs and time on small and medium-sized enterprises will increase.  While upfront investments have been made in security evaluation infrastructure, its utilization within the global supply chain remains uncertain.

The Ministry of Trade, Industry and Energy has invested 49.5 billion won in new autonomous driving projects in 2026, shifting the technological focus from rule-based methods to multimodal E2E-AI. While vehicle competitiveness depends not only on sensors and control components but also on video, behavioral, and exception data accumulated on actual roads,  the scale of driving data and the learning system jointly accessed by Daegu-based companies remain unconfirmed. If data is dispersed among individual projects, operating agencies, and automakers for two to three years, local parts manufacturers will be relegated to the position of receiving AI model input and verification specifications from external sources.  Although Daegu possesses an autonomous driving testing infrastructure, the local accumulation of AI learning assets is unclear.

The CAV-based future mobility autonomous driving evaluation platform and the Mobility Specialized City project serve as a foundation for verifying technology in actual road and traffic environments. However, there is no integrated performance table showing instances where data generated during demonstrations led to product improvements, new component development, and orders for local companies.  If demonstrations are tallied solely as operational results for city projects, they are not reused as industrial data. If the data boundaries between traffic demonstrations and corporate technology development remain fixed by 2028, costs will be incurred to collect the same field data again.  While Daegu possesses a demonstration environment, its data reuse structure is still in its early stages.

The Comprehensive Support Center for Future Vehicle Transition presented a cumulative total of 180 new hires as an achievement. While employment growth has been confirmed, there is no data distinguishing whether these positions are in mechanical design, machining, and quality control, or in power electronics, embedded software, AI, and cybersecurity. In the transition to SDV, the proportion of software convergence roles, rather than total employment, determines a company's internal capabilities.  If new hires accumulate over the next two to three years centered on existing production workers, employment achievements will remain, but the SDV capability gap will persist.  Although future vehicle employment in Daegu has increased, the nature of job transitions remains undeterminable.

Automotive parts companies in Daegu possess production technology and quality control personnel accumulated from the internal combustion engine supply chain. While this workforce has the foundation to transition to the production of electric vehicle components, vehicle software, functional safety, cybersecurity, and data analysis require separate capabilities.  The completion rate of job transitions, on-the-job placement rates, and 1- to 2-year retention rates of current employees have not been disclosed. If reliance on external developers continues until 2028, companies will lose technological control with every product change. Although  Daegu has a strong manufacturing workforce base, its internal workforce base for SDV remains unconfirmed.

The Comprehensive Support Center for Future Vehicle Transition, Motor Specialized Complex, Electrification Component Evaluation, Autonomous Driving Platform, and SDV Security Evaluation Center have been identified.  While the infrastructure for electrification, testing, and corporate support is at a mid-to-high level, the capabilities of local companies in software architecture, vehicle data, OTA, and AI autonomous driving are confirmed to be only limited. If the support system remains focused on individual component development and evaluation until 2028, entry into the upper levels of the SDV value chain will be delayed. The current level of readiness is assessed as mid-to-high for electrification, mid-to-low for SDV, and early-stage for AI autonomous driving .

The support center supported 22 companies in 2023 and expanded cumulative commercialization sales and employment performance by 2026. On the other hand, the proportion of companies generating sales exclusively for future vehicles and the number of SDV suppliers within the entire Daegu automotive parts industry remain unconfirmed.  If the gap between supported and unsupported companies accumulates over the next two to three years, a dual structure consisting of a small number of transitioning companies and a large number of existing companies will become entrenched. The level of corporate diffusion is assessed as progressing in the transition of leading companies, while diffusion across the entire industry remains unconfirmed.

The scope of technology has expanded to include drive motors, electrification modules, electronic components, and autonomous driving. However, the software sales, proprietary IP, OTA-compatible products, and track records of participation in E2E-AI or automotive semiconductors by local companies were not disclosed in an integrated manner. If hardware transition proceeds faster than SDV transition by 2028, the gap between the upstream and downstream segments of the technology value chain will widen. The level of technology diffusion is assessed as electrification diffusion, SDV limitation, and the early stages of AI autonomous driving .

Daegu's automotive parts companies possess competitive existing supply chains, evidenced by the fact that 12 of the top 100 domestic companies are based there, and commercialization revenue has been generated through support programs. On the other hand, contractual evidence of local companies participating in next-generation SDV platforms and global OEM mass production programs is limited. If mass production orders are not secured within two to three years, the validity period of prototypes and test results will expire, resulting in additional development costs. The level of market readiness is assessed as upper-middle for existing supply chains and lower-middle for entry into next-generation platforms .

National automotive policy will fully support E2E-AI, standard-based SDV, and AI-SDV platforms starting in 2026, and global automakers are also integrating electric and electronic architectures. While Daegu is establishing evaluation centers and electrification infrastructure, the speed of software and data transition for local companies remains unconfirmed. Once next-generation vehicle platform suppliers are finalized in 2028–2029, verification and integration costs for new parts suppliers will rise significantly.  The golden time for the transition of Daegu's automotive parts industry is assessed to be the next 24 months .

The number of internal combustion engine parts could decrease by up to 50% due to the transition to electric vehicles, while demand for engines, intake and exhaust systems, and fuel supply systems is set to disappear.  Companies whose production facilities, skilled workforce, and long-term supply relationships are tied to existing parts will find it more difficult to secure transition funds following a decline in sales. If mass production revenue from new products is not generated by 2028, it is highly likely that facility idleness and workforce attrition will occur simultaneously. Irreversibility is assessed as high risk for companies dedicated to internal combustion engines, medium risk for electrification companies, and high risk for companies not entering the SDV market .

Daegu's automotive parts industry has begun the transition to future vehicles, generating commercialization revenue and employment.  The testing and support infrastructure for electrification and electronic components has enhanced the potential for the regional industry's transformation.

However, current changes are centered on electrification hardware rather than the entire future vehicle . The market position of local companies in SDV design rights, software, vehicle data, and AI autonomous driving has not been confirmed.

The final judgment is “Electrification Transition Progress + SDV Control-Layer Gap .  ” The Daegu automotive parts industry is keeping pace with the transition to future mobility to some extent, but the speed of SDV transition is slower than changes in market structure.

Overall Score: 58 / 100

Golden Time Status:
ORANGE

Time Window:
Approx. 24 months

Failure Mode:
Transition from internal combustion engine components to electrification components, but the software and data value of SDVs is transferred offshore.

Irreversibility:
High risk for companies specializing in internal combustion engines and those not entering SDV.

Evidence Sources

• Daegu Industrial Economy Trends—Mobility Industry Statistics
• Daegu Future Vehicle Transition Comprehensive Support Center
• Daegu Metropolitan City Business Support Pocketbook—Future Mobility & SDV Support
• Ministry of Trade, Industry and Energy—2026 Automotive Industry Investment and AI-SDV Support
• Ministry of Trade, Industry and Energy—Future Automotive Parts Industry Act and Future Vehicle R&D
• Daegu Metropolitan City Council—SDV Electronic Components Security Evaluation Center and Mobility Business
• Daegu Metropolitan City Council—Future Mobility and SDV Budget Review
• Korea Automotive Research Institute—Transformation of the Automotive Parts Industry Ecosystem by 2026
• Daegu Gyeongbuk Research Institute—Survey on Automotive Parts Companies' Response to Future Vehicles

Structural Insight — SDV is a change that changes the customers of component companies, rather than a change that eliminates components.

The transition from internal combustion engines to electric vehicles reduces engine, exhaust, and fuel system components while increasing motor, inverter, and thermal management components. Even at this stage, the customers of parts suppliers remain automakers and upstream suppliers, and the existing structure of price, quality, and delivery time as competitive criteria is largely maintained.

In SDV, even the same hardware must be connected to the vehicle's operating system, software interface, and update policy to function.  The actual customers of parts suppliers extend beyond purchasing departments to include the automaker's software platform, data, and security architecture.  In this structure, entry into the next-generation supply chain is not guaranteed solely by the capability to produce high-quality parts.

The biggest transition risk for Daegu's automotive parts companies lies not only in the disappearance of their products. Even if existing products are replaced with electrification components, their supply status declines if they fail to access new design rights holders and software specifications. The transition to SDV in Daegu is ultimately determined not by changes in the number of products, but by whose specifications local companies adhere to and with whom they engage in joint design .