In Korea, free trade still not balanced trade
|Hans Greimel is Asia editor for Automotive News.|
TOKYO -- Import car sales in South Korea rocketed 20 percent higher in 2013 to an all-time high. Proof that the U.S. free-trade pact is finally paying off for Detroit? Think again.
True enough: Imported car sales soared to a record 156,497 vehicles last year in that import-averse market from a previous record of 130,858 vehicles in 2012, according to the Korea Automobile Importers and Distributors Association.
But a closer look shows some lopsided results.
European brands were the big winners. The Americans? Also-rans.
Audi sales climbed 33 percent to 20,044 vehicles. Mercedes-Benz advanced 22 percent to 24,780. Volkswagen surged 39 percent to 25,649 units. And topping all foreign brands in South Korea was BMW, which notched an 18 percent increase to 33,066 vehicles in 2013.
Detroit's shipments paled by comparison.
Ford's sales rose an impressive 41 percent. But volume was tiny at 7,214 vehicles. Chrysler finished basically flat at an even more paltry 4,143 units.
And Cadillac slid 37 percent to 300 vehicles.
General Motors sells many more than that in Korea. As a whole, it ranks No. 3 in Korean sales behind Hyundai and Kia. But the vast majority of its vehicles are made locally.
They don't count as imports and don't benefit from the free-trade agreement.
Still, the four big German brands alone account for two-thirds of an import market crowded with not only other European brands and the Americans, but the Japanese too.
It shows how brand perception plays a huge role in Korea. The Germans occupy the premium space, wielding a special cachet. Even VW enjoys some of the quality halo imbued by a "Made in Germany" label. The Detroit brands can't match that.
As in Japan, Korean customers wonder why they would buy a mass-market American import when there are plenty of locally made alternatives.
If they can't afford a Bimmer, they can at least spend their money patriotically.
Nevertheless, imports made have big inroads since 1987, when South Korea opened its doors for foreign brands. That year, only 10 foreign cars were sold nationwide.
The big shifts came in 2011, when South Korea enacted a free-trade agreement with the European Union, and in 2012, when the free-trade pact with the United States took effect.
But as the 2013 results show, free trade still does not equal balanced trade.
The free-trade pacts have made it easier for Korea's increasing ranks of rich to afford luxury. But they have yet to spur serious interest in more middle market offerings from abroad.
You can reach Hans Greimel at firstname.lastname@example.org. -- Follow Hans on