More good news for Hyundai/Kia: new U.S. trade pact favorable

South Korean automakers received a pretty big shot in the arm as a trade agreement was reached with the United States. The trade pact, which lasts for 15 years, took nine months to negotiate. With the new agreement, tariffs will be immediately lifted on cars with engine displacements of 3-liters or less. Cars with displacements greater than 3.0L will have to wait three years, and trucks will have to wait 10 years before the tariff is lifted. As expected, Hyundai stock shot up 3.3% on the news, and Kia saw an increase of 5.5%.

For their part, in three years the South Korean government is levying a flat tax of five-percent on all vehicles, domestic or imported. Automotive News cites experts who believe the trade agreement won't help US automakers much, since demand for their products isn't as high as that of luxury automakers like Lexus or Audi.

Within the past few years, Hyundai and Kia have gone from makers of cheap, unattractive junkers with great warranties, to companies with good quality, improved designs, and great warranties. Losing the import tariffs will help Korean automakers deliver good products at an even better value. With new products on the horizon like the RWD, V8-powered Hyundai Genesis concept, we think the domestics and Japan had better take notice of the South Korean automakers, or risk getting left in the dust.

[Source: Automotive News (Sub. Req.)]