By on October 4, 2017

South Korea Chevy Malibu 2015

Officials from the United States and South Korea held a special session in Washington on Wednesday as part of U.S. Trade Representative Robert Lighthizer’s request to consider amending the two countries’ trade agreement. The joint talks serve to reassess the countries’ five-year pact, with the Trump administration aiming to diminish America’s growing trade deficit with South Korea.

One of the largest issues concerns the automotive industry. Korean rules stipulate a cap on the number of vehicles U.S. automakers can bring into the country each year that adhere to the country of origin’s safety standards. Presently, that quota sits at 25,000 vehicles per manufacturer. However, no U.S. company has ever made full use of the quota. General Motors, which is the most popular U.S. brand in South Korea, only sold 13,150 domestically built units in 2016. 

Still, Western officials are expected to pressure South Korea into permitting more vehicles into the country in hopes of closing its $17.6 billion trade deficit with the Asian nation.

The talks are a second attempt between the countries to reach an agreement after an initial meeting in August ended in a stalemate. Korean officials are rumored to have been less than interested in revising the agreement, made during the Obama administration. But what good raising the cap on the number vehicles exported from the United States would do is unclear when no automaker has yet to reach it.

In Korea, U.S. imports are seen as inferior to most German brands in terms of sophistication, fuel economy, and build quality. Japan has a similar outlook on American automobiles that has influenced the country’s buying trends for ages. The silver lining is that American-made EVs don’t seem to suffer from the same stigma as internal combustion cars. Chevrolet’s Bolt received a warmer than expected welcome in the Korean peninsula while Tesla dealers have a six-month waiting period for anyone who wants to test drive one of its vehicles. It’s actually quicker just to purchase one and have it shipped over.

With more electrics forthcoming, Korea’s appetite for U.S. autos could grow. So, assuming a hot ticket American model does hit the 25,000 unit quota in the years to come, problems could arise. It could cost millions of dollars for a single model to be modified in order to meet Korean safety standards and the likelihood of that contingency occurring has grown. South Korea imported a total of 13,669 cars from the United States in 2011, but that number had grown to 49,096 units by 2016.

[Source: Bloomberg] [Image: General Motors]

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43 Comments on “U.S. Attempts to Convince South Korea to ‘Buy American’...”


  • avatar
    Corollaman

    Buy American or we’ll pull our troops! That may work, or maybe not.

  • avatar
    Corollaman

    I’ve seen quite a few videos from Seul and the vast majority of the cars there are Hyundai and a few germa makes.

  • avatar
    mmreeses

    parking spots in East Asia (and Europe) are narrow—good bet that Malibu would barely fit into many parking spots for the Korean who would buy it.

    Narrow spots are a problem even for the Asian domestics in their home countries as all modern cars have kept widening while the lane paint has stayed the same.

    Not to mention that Malibu pictured has awful visibility, in my opinion,—kinda important when you have to deal with a lot more pedestrian traffic than in America—like driving through alleys/streets where pedestrians and cars share the same pavement.

    • 0 avatar
      Heino

      Interesting to see culture and stereotypes. I noticed the UK was as agnostic as we were about brands. France was all about European brands, save for a few Yaris’s (Yarii?). Our aviation/space products are world renowned, I think it was great that Ford got Allan Mullaly. Maybe the auto industry needs to work with the aerospace industry .

    • 0 avatar
      TwoBelugas

      the Malibu is 2 inches wider than an Elantra and the same width as a Sonata.

      Visibility? have your driven a Hyundai lately?

    • 0 avatar
      TMA1

      The Malibu is the same size as the Sonata and Optima, by far the most popular cars in Seou based on my observations.

    • 0 avatar
      bd2

      While parking is a premium in places like Seoul, large sedans are popular in SK.

      The Malibu is actually sells pretty well in the Korean market, but that’s built in SK (taking out fleet sales, the Malibu has actually outsold the Sonata).

      The larger Impala has also done pretty well and Korea is the one country where the Impala is exported from the US.

      Problem is, most of the GM, well, Chevy’s products which sell in Korea are built there.

      Cadillac has been making some inroads, but presently, is still seen as being behind the Germans (that may change as the Korean market is moving away from diesel).

      Ford and Chrysler offered little in the way of products that appeal to the Korean consumer.

  • avatar
    Pricha33

    You mean the ole USA doesn’t have the highest safety standards in the world. Can someone explain what Korean regulations the NA cars don’t meet ?

  • avatar
    whitworth

    It’s amazing how badly the US gets ripped off on these trade deals.

    So South Korea has a 25,000 yearly vehicle cap per manufacturer? What is our cap with South Korean imported cars? I’d be shocked if there even is one.

    And how many US soldiers are on the DMZ protecting them again?

    • 0 avatar
      Ce he sin

      You’ll need to read a bit more carefully.
      “Korean rules stipulate a cap on the number of vehicles U.S. automakers can bring into the country each year that adhere to the country of origin’s safety standards.”
      So, how many Korean spec cars does the US allow? None?
      What’s the cap on Korean spec US cars sold in Korea? I’m guessing you can sell just as many as people will buy.

      • 0 avatar
        Big Al from Oz

        Ce he sin,
        I do believe a number of commenters on this site don’t realise the US and Canada (to a lesser degree) have different design regs to the rest of the world.

        The US will also not accept any vehicle, unless its 25 years or older to omport and drive on US public roads.

        • 0 avatar
          Lou_BC

          @Big Al from Oz – Canada doesn’t appear to be as strict as the USA when it comes to “grey” imports. IIRC, our import timeline is 15 years. I also believe that with the EU trade deal, there will be reciprocity on EU/Canada standards.

          We tend to homogenize with the USA due to the size of their market. Many Canadians just assume what goes in the USA automatically is legitimate in Canada. We don’t have mandatory TPMS but many tire shops and even car dealerships claim that we do. We do have DRL’s which is also different than the USA.

          Canada is passing a regulations governing rear marker lights. Since we have DRL’s and the car companies for some odd reason feel that people need “auto on” instrument panel lights, idiots are driving around without turning on their lights. That means zero rear lights. There have been enough collisions reported to Transport Canada to make this a safety issue of note.

  • avatar
    PenguinBoy

    “In Korea, U.S. imports are seen as inferior to most German brands in terms of sophistication, fuel economy, and build quality… The silver lining is that American-made EVs don’t seem to suffer from the same stigma as internal combustion cars.”

    That’s really kind of odd, since “sophistication” and “build quality” have more to do with the “Car” than with “Electric”. A sloppy suspension, or a cheap plastic door handle that feels like it’s going to come apart in your hand, don’t have anything to do with what kind of powertrain is under the hood.

    • 0 avatar
      dawooj

      “In Korea, U.S. imports are seen as inferior to most German brands in terms of sophistication, fuel economy, and build quality…”

      Isn’t this true in the US too? Check leading publication comparison tests on subcompact, compact, midsize, and full size cars. The US brands usually don’t fare so well on US publications.

      If I were living in Korea and I have to pay a premium on an import car along with extra costs due to tariffs, I’d consider a Japanese make before American. Or just save my money going with a domestic that’s comparatively on par or even better.

      • 0 avatar
        TMA1

        Good luck finding a Japanese car for sale in Korea. That will go over great with the Korean members of your social circle.

        • 0 avatar
          bd2

          Actually, Japanese brand sales are rising again in SK, as the Korean market is moving away from diesels and towards hybrids and electrics and the currency valuation makes Japanese autos competitively priced.

          Japanese sales rose some years ago as well, but then poor currency exchange rates really hurt sales.

    • 0 avatar
      iama

      It drives me crazy when all manufacturers in a given country are stereotyped. It’s OK for Korea and Hyundai and Kia are the same company. Otherwise, it’s bigotry.

      I wouldn’t touch a Suzuki (or Nissan) car with a ten foot pole. Honda is fine. I’ve had bad experiences with Toyota. Yes, anecdotal, but they’re dead to me.

      I won’t buy a VW ever, but would consider a Mercedes.

      I won’t buy Chrysler, but have had exceptional experiences with Ford.

      Hyundai has exported garbage for many decades. Now that they’re finally building cars that are competitive, Korea has an attitude? F-em.

      OK, I get that a single statement from an article does not represent the entire Korean population. Perhaps my anger should be directed at the implication that all Korean’s share the same option. They don’t and shame on this article for that stereotype. As an example, a Korean co-worker of mine is a Jeep fanatic.

  • avatar
    Big Al from Oz

    This article highlights the issues confronting the US auto manufacturers.

    1. Why should Korea accept any US specified vehicles? At least the Koreans allow 25 000 US vehicles from EACH manufacturer to be imported into Korea. The US allow none, unless the vehicle is over 25 years old. This is why most every country outside the US can buy and operate US pickups/cars, even though they don’t meet local safety standards and regulations.

    2. What small vehicles does the US manufacture that the Koreans want? The US has set itself up as a large vehicle manufacturer, ie, pickups and SUVs because it is uncompetitive in small vehicle manufacturing. Even US large vehicles are protected in the US via a raft of protective regulations and tariffs (chicken tax).

    3. The US has positioned itself as a poor vehicle exporter, why do you want to export vehicles? Of all the exports out of Korea to the US I would of thought motor vehicles represent a small portion of the debt, but choosing motor vehicles by the US is sort of naive, why not another product?

    The US whining about vehicle exports needs to look closely at restructuring it’s own market and adopt what it’s competitors are doing and remove barriers like the chicken tax.

    The current system adopted by many countries facilitates trade between countries and makes it more transparent when regulations and other methods are used as barriers, as is the US case.

    So, to the US. Manufacture vehicles to suit other nations. Once this is done others will most likely buy your products if they are suited to that market.

    The market for fullsize pickups and SUVs is small outside the US.

    As for the Bolt, I would of thought the author knew that LG had most to do with the Bolt, not GM. The Bolt was developed in Korea.

    If the US played ball with the rest of the world in vehicle manufacturing it might be able to export more. If it can’t it shouldn’t whine about lost opportunities.

    • 0 avatar
      Lou_BC

      @Big Al from Oz – we have entered the winter of the USA empire with the current regime. Some experts feel by 2030 that process will be complete which includes no longer being the global currency of trade.

      • 0 avatar
        Big Al from Oz

        Lou,
        I hoping otherwise, hence my comments that are construed as anti US.

        My opinion is the way the US auto manufacturers are heading is similar to what occurred in the 70s during the energy crisis. The US will be left with very little to offer, except large pickups and SUVs. The problem is this time the changes are more significant.

        I did make several comments a couple of years ago when I went to the Paris Auto Show regarding EU EV tech and how advanced the EU was. The Chinese will move forward rapidly with EV tech and the Koreans, ie, LG.

        Tesla isn’t going to be the “Apple” of the auto industry.

        My view is the US can’t live in the past, this is what makes up some of the comments on this site. It’s good to be patriotic, but when patriotism clouds judgment, it’s scary. The US might even vote in a dud President.

        I do like fullsize pickups, but like the full size sedans that ruled the road in the 70s, issues might arise in the future, even with the gradual EV changeover.

        The US will become a large importer of EVs, as they are with small vehicles. EVs are small vehicles, large ones will kill the bank account, even into the foreseeable future.

        In a way Australia is in a similar boat, except we have gradually weened the auto industry to suit our population and small market. The US needs to change policy to suit it’s market and future market. This isn’t occurring.

        • 0 avatar
          Lou_BC

          “The US might even vote in a dud President.”

          You mean another “dud” since the current one is already that and much more.

          If anything, the GOP is dying and a populist party will most likely take its place. It was a matter of time since that party is mostly made of the very rich and the low end of the spectrum. It was just a matter of time for the low end to wake up.

  • avatar
    motorrad

    I live in Seoul and Chevrolet is very popular among the under 40 crowd. Koreans don’t like the Japanese (I’m not going to explain it look it up if you don’t believe me) so Japanese cars are not popular. If you want to own an imported car and you can’t afford a German brand Chevy is just the ticket. I see Impalas and Malibus but the most common are Sparks and a small CUV that isnt sold in America (cant remember the name off the top of my head). It also helps that GM and Daewoo have had a long relationship. It’s only one man’s anecdotal evidence but I’d say after the premium German brands, Chevy is the most common import I see.

  • avatar
    87 Morgan

    Just for fun, the U.S. should tell all of our trading partners world wide.

    Our trade policy, is your policy. 25k of ours, 25k of yours.

    • 0 avatar
      threeer

      87 Morgan,

      In general, I agree…especially with countries like China (but we all know that will never happen).

      I think the small detail missed of this one is the “country of origin” specifications. I don’t think we allow Korean vehicles made to Korean specifications are allowed in the US, anymore than US-spec cars are allowed in Korea (save the 25,000).

    • 0 avatar
      Ce he sin

      That’s not the case now though is it? Korea allows 25,000 non-Korean spec cars per US manufacturer and as many Korean spec ones as people will buy. Which may be a very small number, given that US makers can’t even sell their non-compliant quota.

      The US allows precisely zero non-US spec cars from Korean manufacturers unless the cars are at least 25 years old..

    • 0 avatar
      PandaBear

      They didn’t even sell 25k because our cars aren’t that great and never design with their customers in mind.

  • avatar
    FreedMike

    I just want DW to weigh in on that picture.

  • avatar
    06M3S54B32

    They are a smart people that’s why the don’t buy ‘merican car. American cars suck.

  • avatar
    PandaBear

    Why don’t we just sell some US made Corolla or Civic over there? Problem solved.

    If you want to sell American cars outside of US, stop designing them with retro styles that make no sense to them. Sure, some people think the 08 Camry as ugly and Corvette as good looking. Most foreigner think otherwise, maybe if you want to sell American cars there, design a few models for that market instead of dumping our design (that the Coastal US cities don’t even sell well) there, no?

    p.s. Please fix the interior quality. I don’t care for the “soft touch” material that is glued onto the dash and the painted plastic and electroplated chrome bits that will fall off and discolor in a few years. And if you absolutely have to use them, please line them up so it doesn’t look like a $5 3-pack tupperware.

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