France has been vocal, but not alone, in noting the rise of the South Korean automakers in Europe. The signing of a free-trade pact in 2011 between South Korea and the EU, along with the especially value-conscious buyers in a crisis-stricken Europe, has seen market share increases measuring in the double digits for Hyundai and Kia – analysts expect 14-percent growth for the two in 2012.

A report in Bloomberg has found that there's pain at the other end, too: The pact more than halved import tariffs on European cars headed to South Korea to 3.2 percent, and prices are now close enough to domestic offerings for more South Koreans to pay the premium for foreign luxury nameplates and the cachet they confer. Products sold by the five domestic automakers hogged 92 percent of the market last year, and sales have dropped 5.2 percent this year whereas import sales have risen by 24 percent. This will mark the first year that imports claimed ten percent of the market; compare that to 2002, when domestic market share in the world's 11th largest auto market was 99 percent.

The Germans are at the head of the arrow, counting for 65 percent of imported car sales, but every foreign maker has seen double-digit gains. Analysts think foreign makes could ultimately grab 15 percent of the market.

The US signed a free-trade agreement with South Korea last year after years of back-and-forth negotiations. The import tariff on US cars was halved to four percent, and by 2016 there won't be any tariff at all. The hope is that the deal will quickly mean the US will be able to export and sell more than a miniscule fraction of cars to the Asian nation's buyers; the US Internal Trade Commission predicts a 54-percent climb in exports to the country is possible. A side beneficiary of the deal is the Japanese makers: With no free-trade deal between their home country and South Korea, manufacturers like Toyota and Honda are now looking forward to sending more of their American-made product to the peninsula.


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    • 1 Second Ago
  • 22 Comments
      MAX
      • 2 Years Ago
      WONDER IF THE KOREAN WILL TRY TO START SELLING CARS IN THE DE FACTO CLOSED JAPANESE MARKET?
        zoom_zoom_zoom
        • 2 Years Ago
        @MAX
        Bill, I dare you to give us a link to a law showing Japan's market is "closed".
          zoom_zoom_zoom
          • 2 Years Ago
          @zoom_zoom_zoom
          Bill, are you still looking for a link? Or, you knew all along you were spewing lies!
          Carlos
          • 2 Years Ago
          @zoom_zoom_zoom
          You are incorrect in saying that the Korus-FTA was signed by Obama. In fact it was negotiated by President Bush and was finished on April 4, 2007. At Obama's insistence it was renegotiated with terms more favorable to the US in 2010 and it has been approved by the US Senate. It is too complicated to describe here but all tariffs on larger automobiles are being reduced in steps, to zero. Tariffs on smaller cars already are equal in both countries. Far more important, tariffs on agricultural products are being reduced in steps and trade between the US an Korea (the 7th biggest purchaser of US goods) is increasing.
        Bruce Lee
        • 2 Years Ago
        @MAX
        The one where Germany luxury brands sell quite well?
        gnvlscdt23f
        • 2 Years Ago
        @MAX
        Well, Hyundai already tried and pulled out except for trucks and buses. I don't think they'll be going back soon.
      rjwatsonmotors
      • 2 Years Ago
      Good luck to Japan. The Koreans haven't forgotten WWII.
      • 2 Years Ago
      [blocked]
      Sahngseok Lee
      • 1 Year Ago
      I'm Korean, and I don't think American cars are hopeful in Korea. Chevrolet? Its name's Chevrolet but all chevrolets sold in Korea are made in Korea, and it sells much less than Hyundai or Kia because Chevrolet cars are heavy, slow(for example, Korean spec Malibu emits 30 less horsepower than Sonata) and gas guzzlers. Oil price in Korea is $1.82/L, which is equivalent to $6.89 per gallon. You should also consider that South Korea's GDP per capita is less than a half of that of USA. Thus, Koreans are extremely sensitive to fuel efficiency. Do American makers make fuel-efficient cars? Well, better than before but still not as efficient as Japanese or German cars. BMW 520D does 18km/L(=42MPG), has excellent styling and joy of driving and is the best selling imported car in South Korea. Chrysler 300C also has diesel engine, but most Koreans still remember American cars of 10 years ago. Poor fuel efficiency, cheap-looking interior, poor build quality- these are what Koreans think about American cars. Secondly, Koreans tend to show off with their cars so they care really much about the brand value when buying a car. However, as I mentioned, American car's reputation is really disappointing here. They'd rather buy a Toyota, Honda or Nissan, not Ford or Chrysler. If those three big-name automakers really want to be successful in South Korean market, they should try to make more fuel-efficient diesel or hybrid cars with excellent styling and luxurious equipment. Ford Fusion Hybrid looks hopeful only if it's priced not higher than Japanese midsize sedans. Still, it will take quite a long time for American makers to improve their reputation in Korea.
        Titansfan1967
        • 1 Year Ago
        @Sahngseok Lee
        Mr. Lee has forgotten that GM owns daewoo.
          Sahngseok Lee
          • 1 Year Ago
          @Titansfan1967
          I know that GM owns Daewoo Motors and now it's GM Korea. GM Korea has made several cars such as Spark, Cruze and so on, but GM Korea uses GM's international body structure and engines-the ECOTEC which is not "eco"-friendly at all. GM's body structure's very stiff and has excellent stability but it's too heavy, which makes GM and GM Korea cars all gas guzzlers. Also, ECOTEC engine doesn't emit much power without turbocharger. GM indeed has excellent ECOTEC engines equipped with turbochargers, but they never sell it in Korea.Even though GM Korea played quite an important role in the development of several cars, They don't have any authority to do something to meet the needs of Korean consumers. GM Korea develops and produces cars only in order to reduce the production cost of GM, not to be successful in Korean market. GM Korea developes and produces what Korean consumers don't like at all.
      cray
      • 2 Years Ago
      I wonder if on some Korean auto website are crying foul and chanting "Buy domestic!"
        Edward Ellsworth
        • 2 Years Ago
        @cray
        I live in South Korea and yes, cray, of course they are. And no, Daniel D, they have a very nationalistic view, much more so than in the US. HOWEVER, that has all started to shift nowadays. 10 years ago, people told me they were afraid others would think ill of them for driving a foreign car. It was taboo to seem different, stand out from the crowd. Now, there is a big emphasis on design, and people WANT to be stylish and make a statement. But foreign cars are still considered luxuries, and dealers/importers tend jack up the prices regardless of tariffs. And yes, that is changing nowadays too - companies like Ford and Toyota are slashing their prices to pick up market share. However, mainstream brands are still relatively low sellers: BMW is Number 1 by a HUGE margin, followed by Audi and Mercedes.
        Daniel D
        • 2 Years Ago
        @cray
        They probably have a more global view. Most markets do.
          zoom_zoom_zoom
          • 2 Years Ago
          @Daniel D
          Bill, tell us about this best selling Brazilian car. I'd also like to hear about this fantastic selling Mexican car company.
      • 2 Years Ago
      [blocked]
      RGT881
      • 2 Years Ago
      I'm certain they aren't minding the benefits of market share gained in Eastern and Western Europe, not to mention the growth in the NA market.
      Awhattup
      • 2 Years Ago
      Koreans favor foreign cars because it shows their wealth not because they are better or not. Let me put it this way. The Genesis Coupe and the Mustang(or Camaro) are comparable cars but Koreans would pay far more for a base Mustang than a fully loaded GC. Hell.. the Camry and the Accord are way more expensive than the Sonata or the Optima by a lot(I mean... a lot!) They still prefer to pay that money to show off. I lived in Korea for a good while so I know the market pretty well. Korean market is still a friction of what Hyundai/Kia sell globally. I doubt that will do much damage.
      Bruce Lee
      • 2 Years Ago
      I'm sure Germany doesn't mind since they're a strong luxury automotive player whereas countries like France will likely end up the losers. In the end though it's probably for the best since it drives up the level of competition for everyone-you can't hide behind protective tariffs anymore to sell pieces of crap.
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