The Korean automobile industry was developed and expanded in terms of both quality and production capacity in the 1980s. By estab- lishing the basis for mass production, it began to play a role in the struc- ture of the international division of labour in the 1980s. HMC developed the ‘Pony Excel’ in 1985 and equipped its factory with 300,000 units capacity. The number of cars exported in 1986 reached 203,000 units. Daewoo started to produce the ‘Lemans’ in 1985 and acquired 170,000 units production capacity. KMC produced the ‘Pride’ at a capacity of 120,000 units. The major difference among the VMs was that HMC exported under its own brand whereas Daewoo and KMC exported by original equipment manufacturing (OEM). The government ban on industrial specialisation was lifted in 1987 and the VMs were set free to produce any type of vehicle. Rivalry among domestic manufacturers started from this time with product differentiation and deployment of marketing strategies. Coinciding with the increase in exports, there was also a strong trend of increase in domestic demand as the national economy recovered. This was inevitably followed by mass production which led to ‘motorisation’ of the country. The growth in domestic demand recorded a 46 per cent increase in 1989 over the previous year. Total domestic cars sold in 1991 recorded 1.1 million units. This increased domestic demand stemmed from wage increases and the over- all enhanced domestic economy. In addition, differentiated products and marketing strategies stimulated the customers and induced demand for cars.