It has been about 10 months since the KORUS FTA and one year and seven months since the EU FTA went into effect. As those familiar with this long drawn out process may recall, the biggest sticking point for both agreements has always been about cars.
Yesterday’s WSJ has an interesting piece on how the Korean auto market is evolving after passage of the two FTAs. The short answer appears to be that imports are making headway into the Korean market at the expense of domestic producers, as this chart would indicate:
European luxury cars and some German mainstay brands appear to be leading the way:
German brands from BMW AG and Volkswagen AG have led the way in the import market, accounting for 64% of imported-car registrations last year, followed by Japanese brands with 18% and U.S. autos with 7.4%. Sales of diesel-powered cars—most of them from Germany—accounted for more than half of sales.
“With oil prices going up, we are beefing up our diesel lineup to compete with German brands and planning to offer more products at competitive prices,” said a Hyundai executive.
Another interesting bit is that it isn’t necessarily American build American branded cars that are the immediate beneficiaries of the KORUS FTA. Well, it is still early (the tariffs on both sides get completely eliminated in five years), but the early winners may be Japanese branded cars build in America.