Car Exports: Recession, Expansion of Overseas Production Cut Back on Korea’s Car Exports | BusinessKorea

Saturday, December 16, 2017

Korea's exports of automobiles contracted 11.8 percent last year.
Korea's exports of automobiles contracted 11.8 percent last year.
SEOUL,KOREA
11 January 2017 - 11:30am
Michael Herh

It was found that Korea's exports of automobiles contracted 11.8 percent last year. They were affected by the recession and the expansion of overseas production.

According to the Ministry of Commerce, Industry and Energy (MOCIE), the output of automobile industry in 2016 slid 7.2 percent, domestic sales 0.4 percent and exports 11.8 percent. Exports dropped by 26.2 million units, or 40.6 billion dollars (11.3 percent), due to a slowdown in global automobile demand, strikes in the second half, and the expansion of overseas production.

By region, Korea recorded weak automobile exports to all regions except Europe and Oceania. In the United States, market demand increased, but Korea’s car exports slipped 10.7% due to the sluggish passenger car market, the operation of plants in Mexico, strikes and hurricanes.

Exports to Africa and the Middle East plummeted 36.5 percent and 28.4 percent, respectively due to low oil prices. Exports to Latin America also shrank 19.4 percent due to falling commodity prices and Brazil's economic downturn. Exports to Asia including China and Japan plunged 33.8 percent. 

On the other hand, exports to the European Union grew 2.5 percent thanks to strong sales in Belgium, Italy and Poland, and exports to emerging economies swelled 11.4 percent in January 2016, thanks to the free trade agreement (FTA)

Despite the launch of a variety of new models, domestic automobile sales fell by 0.4 percent year-on-year to 1.852 million units due to the end of cuts in individual consumption tax. Domestic car sales dropped in three years since inking -0.1 percent in 2013. 

Korean automakers achieved sales of 1,573,000 units, up 1.0 percent from the previous year, due to individual consumption tax cuts and new car effects such as the SM6 notwithstanding.

On the other hand, import cars recorded 250,000 units in sales, down 8.3 percent from the previous year, due to the suspension of sales of Audi Volkswagen cars involved in an exhaust gas emissions rigging scandal. In 2015, the number of German brand cars sold was 167,000 units (22.5 percent). But in 2016 it dropped to 138,000 units (-17.5 percent).
 
Car production and exports grew 5.9 percent and 6.3 percent year on year, respectively, while domestic sales fell 7.2 percent year on year in December 2012 according to the MOCIE. The decrease in domestic consumption was attributable to the end of the individual consumption tax cut period despite the strengthening of promotions at the end of the year. 

 

 

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