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Experts Cite Why Koreans Really Shun U.S. Cars

Posted November. 16, 2009 08:32,   


“Korea must further open up its car market to the U.S. All we’re asking for is for our own car companies to be able to compete on a level playing field in the Korean market.”

This is what U.S. Trade Representative Ron Kirk told a dinner meeting of the Korea-U.S. Business Council Nov. 5.

“Korea has been bashing foreign cars by mobilizing non-tariff barriers. The Korea-U.S. free trade agreement must be revised.”

This is what 12 U.S. senators and congressmen said in a letter to Kirk Nov. 6.

On these comments, many Korean experts say the U.S. is ignorant of the Korean market and is trying to show off to American voters.

○ Why American cars are unpopular in Korea

In a survey of 27 experts in Korea conducted by the industrial news desk of The Dong-A Ilbo, 18 said U.S. cars are unpopular in Korea because of “problems with products.” Notably, many of them said the overall quality of American cars is poor, and that they are too big with low fuel efficiency.

Kim Ki-chan, chairman of the Korea Academy of Motor Industry, said, “American carmakers have been focusing more than financing rather than the products themselves,” adding, “Lack of competitiveness at plants can be seen in the vehicles.”

Many critics also said American cars do not cater to Korean tastes. As for luxury vehicles, Koreans like the stately look and dignity, but American cars are seen as too decorative by Koreans.

For example, a U.S. assistant minister reportedly said, “Why would a vehicle unpopular in the U.S. sell well in Korea,” after hearing about an American model popular in Korea while visiting Seoul.

In a survey of general Korean consumers, 16.8 percent cited poor design as why American cars do not sell well in Korea. Another 18.7 percent said they would buy other cars even if American models were sold 10 percent cheaper, citing poor design.

Notably, American cars with poor gas mileage have grown less popular around the world in the wake of the global financial crisis amid high oil prices last year and this year. Hyundai Motor and Kia Motors, with their strong lineup of smaller vehicles, have made great strides abroad, after General Motor and Chrysler underwent bankruptcy protection and Ford struggled due to a managerial crisis.

○ No notable trade barriers

Most experts also brushed aside the notion of trade barriers in Korea. On trade barriers other than tariffs, if any, nine (33.3 percent) cited car standards and regulations such those on as safety and environment, while 10 (37 percent) noted consumer taste and public sentiment.

Kang Cheol-goo, a director at the Korea Automobile Manufacturers Association, said, “Since countries have different climates and driving cultures, the standards and regulations for vehicle safety and the environment should be different,” adding, “When Korean automakers export cars, they also meet the standards of the importing country. These cannot be considered trade barriers.”

As for consumer taste and public sentiment, another expert said, “They could be an obstacle to selling American cars in Korea, but I wonder if we can call it a trade barrier.”

“Should the Korean government go so far as to stage a campaign to promote purchase of U.S. cars?”

An imported car industry source said, “In the past, there were practical barriers, including a ban on advertisements for imported cars,” adding, “I don’t see any notable barriers other than tariffs.”

Four experts (14.8 percent) cited no notable trade barriers.

○ Sales of European, Japanese cars surging

Critics also said that even if there are trade barriers in the Korean auto market, European and Japanese cars are seeing their market shares rising. According to the Korea Automobile Importers and Distributors Association, imported vehicle sales in Korea increased from 19,481 units in 2003, or 1.9 percent of the market, to 61,648 last year, or six percent.

Imported vehicle sales have continued to set new records every year since 2002.

The sales volume of European cars in Korea increased from 12,535 units (1.2 percent) in 2003 to 32,756 (3.2 percent) last year. Over the same period, that of Japanese cars surged from 3,774 (0.4 percent) to 21,912 (2.1 percent) units.

The sales volume of American cars marginally increased from 3,172 (0.3 percent) to 6,980 units (0.7 percent) over the same period. The new BMW series sold 1,578 vehicles in Korea from January through October this year, the fourth largest by volume in a global market. The same tariff rate is levied on all import vehicles.

Except GM-Daewoo Auto & Technology’s vehicles, U.S. car brands in Korea brought through official import channels are Chrysler, Jeep and Dodge imported by Chrysler Korea, Ford and Lincoln by Ford Korea, and Cadillac and Saab by GM Korea.

sukim@donga.com tesomiom@donga.com