U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Table 3.15 Korean passenger vehicle market, unit registrations and market share, 2002–06
2002 2003 2004 2005 2006
Total Korean new passenger
vehicle registrations
Registrations of domestically built
1,241,310 1,021,374 881,322 944,451 976,211
passenger cars in Korea 1,225,210 1,001,874 857,977 913,550 935,681
Market share (percent)
Total foreign automaker
98.7 98.1 97.4 96.7 95.8
registrations in Korea 16,100 19,500 23,345 30,901 40,530
Market share (percent)
Total U.S. automaker registrations
1.3 1.9 2.6 3.3 4.2
in Korea a 4,700 4,100 5,415 5,795 7,165
Market share (percent)
GM, Ford, and Chrysler
0.4 0.4 0.6 0.6 0.7
registrations in Korea b 2,969 3,168 3,509 3,811 4,556
Market share (percent) 0.2 0.3 0.4 0.4 0.5
Source: Commission calculations based on data from Korean Automobile Manufacturers Association Web site and
U.S. Department of Commerce.
a Includes registrations of GM, Ford, and Chrysler vehicles produced outside the United States, as well as
foreign affiliate sales, i.e., Jaguar, Land Rover, and Volvo, are included for Ford, and Saab is included for GM. Not
included are BMW and Mercedes-Benz vehicles produced in the United States for the Korean market; such
registrations totaled 338 and 350 units, respectively, in 2006.
b Includes registrations of vehicles produced outside the United States, but excludes foreign affiliates. In 2006,
GM’s registrations are all Cadillac brand vehicles mostly made in the United States; Ford registrations include the
EU-assembled Mondeo, which accounted for 23 percent of Ford’s Korean sales in 2006; and less than half of
Chrysler’s 2006 registrations were of U.S.-built vehicles.
Market access for imported vehicles in Korea is affected generally by tariffs, taxes, and
TBTs that typically take the form of safety and emissions standards. Many observers also
assert that there is a persistent anti-import bias in Korea. 438 The Korean import tariff of
8 percent for passenger cars and 10 percent for light trucks is relatively high, and the Korean
system of taxation for passenger vehicles has historically been based on engine size,
assessing higher tax rates for cars with larger engines. Nearly all U.S. passenger vehicle
exports to Korea have engines over 2,000 cc, 439 and are therefore subject to the higher tax
rates. 440 Table 3.16 shows the composition of the Korean market based on engine size in
2005.
438 USCIB, “USCIB Comments,” 4; Levin, “Statement of Senator Carl Levin”; Levin, testimony before
the USITC, June 20, 2007, 160-61; ATPC, “Statement of Stephen J. Collins”; Schott, “Autos and the
KORUS FTA,” 2006; Schott, Bradford, and Moll, “Negotiating the Korea-United States Free Trade
Agreement,” 9; UNEP, “Asia and Pacific Vehicle Standards and Fleets”; and VDA, Auto Annual Report
2007, 24.
439 In 2006, 20 U.S.-built Dodge Calibers with engines smaller than 2,000 cc were sold in Korea.
440 In 2006, nearly all Japanese imports sold in Korea were vehicles with engines larger than 2,000 cc, and
62 percent of European vehicles sold in Korea had engines over 2,000 cc. U.S. automakers’ strength is in
passenger vehicles with larger engines. A Ford representative stated that, for the Korean market, importers
tend to import higher-cost vehicles into the Korean market because they bring a higher margin that can more
easily bear the expenses that come from unique Korean designs, shipping costs, tariffs, and other costs.
Additionally, Korean consumers of luxury vehicles are less price-sensitive. Biegun, testimony before the
USITC, June 20, 2007, 233.
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