Asian country avoids an economic downturn.
The South Korean auto market is keeping this Asian nation from slipping into the same economic doldrums seen in the EuroZone as well as in the United States and in parts of Asia. Two Korean companies, Hyundai and Kia, provide the bulk of the business with three foreign-owned concerns also making a difference. The car industry is big business in Korea, one of the strongest economies in the world.
For the first half of 2012, the Korea Automobile Manufacturing Association told The Korean Herald that Korean automotive exports accounted for 13.5 percent of that nation’s total exports. That represents a 15.7 percent increase over last year, the best year over year gain of any industry.
Besides Hyundai and Kia, manufacturers with a strong representation in North America, there are three other companies that have factories in Korea — GM Korea, formerly GM Daewoo, Renault Samsung Motors and Ssangyong Motor, the latter owned by Indian manufacturer Mahindra & Mahindra. Incidentally, one of GM’s newest models, the Chevrolet Spark minicar, is also built in Korea. Other cars such as the Aveo, now called the Sonic, have since been reassigned to factories in the United States.
The Herald reports that the Korean auto industry realized approximately $25 billion in vehicle sales and about $12.1 billion for automotive components. Components include engines, gear boxes, rear view mirrors, aftermarket parts and much more.
On March 15, 2012, the United States-Korea Free Trade Agreement kicked in, removing duties on numerous products including building products, chemicals, consumer goods, paper products and auto parts. KAMA hasn’t said what effect the agreement or KORUS has already had on Korean trade, but the new rules did cover more than half of the reporting period. For the second half of 2012, we’ll have a clearer picture how KORUS benefits Korean and American taxpayers alike.
While Korea is benefiting from an increase in imports including to the United States, not everyone is happy with KORUS and what effect that the trade agreement might have on U.S. industry. Indeed, Democrat Congresswoman Marcy Kaptur stated that Korean manufacturers brought more than 500,000 cars to the U.S. while American manufacturers were only able to send back 6,000. According to Politifact.com the spread was exactly 561,626 Korean passenger vehicles to just 7,450 American passenger vehicles. That first number doesn’t include the 381,505 vehicles Hyundai and Kia build in Alabama and Georgia, underscoring that the Korean market looks a lot like Japan — closed to American manufacturers.