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

gaining U.S. market share regardless of the FTA, and Korean passenger vehicle assembly
in the United States, which has been increasing since Hyundai began U.S. assembly
operations in 2005. Hyundai’s Alabama facility has the capacity to produce 300,000 units
per year, and the Kia plant under construction in Georgia is expected to be operational in
2009, with capacity to produce 300,000 cars per year. The combined U.S. sales of all
Hyundai and Kia passenger vehicles, regardless of whether the vehicles are assembled in
Korea or the United States, are forecast to reach 1,007,328 vehicles in 2011, up from
749,822 vehicles in 2006 (table 3.17). 481 Korean passenger vehicles in the U.S. market have
been viewed by rating groups and in the trade press as having improved both in terms of
quality and value. 482
Table 3.17 Total U.S. light vehicle sales, Korean import share, and total Korean share, in units, 2002–06
2002 2003 2004 2005 2006
Total U.S. sales 16,848,180 16,675,648 16,912,613 16,997,203 16,559,625
U.S. sales of Korean imports 612,464 645,969 782,982 805,183 690,802
Korean import market share (%)
U.S. sales of all Korean-brand
3.6 3.9 4.6 4.7 4.2
vehicles (U.S.- and Korean-built) 612,464 645,969 782,982 848,753 858,947
Total Korean market share 3.6 3.9 4.6 5.0 5.2
U.S. sales of Hyundai imports
U.S. sales of U.S.-produced
375,119 400,221 418,615 411,442 287,375
Hyundai N/A N/A N/A 43,570 168,145
U.S. sales of Kia imports
U.S. sales of GM Daewoo
237,345 237,471 270,055 275,851 294,302
imports a
Source: Automotive News, various issues.
N/A 8,277 94,312 117,890 109,125
a Includes Chevrolet Aveo and Suzuki Forenza/Reno and Verona.
N/A=not applicable.
Some observers note that the removal of the 2.5 percent U.S. tariff would eliminate the
incentive for Korean automakers to expand their U.S. production capacity, 483 and Korean
press reports indicate that the FTA is seen by some in Korea as a way to increase vehicle
exports from Korea and “provide job security for workers in Korea,” 484 because the tariff
481 Automotive News, 2007 Global Market Data Book, 19.
482 For example, the 2007 Santa Fe, Tucson, Sonata, and Entourage earned “5-Star” crash ratings from the
National Highway Traffic Safety Administration; the 2006 Sonata earned MotorWeek’s “Driver's Choice
Award” for Best Family Sedan and Kiplinger's Personal Finance called it “Best New Car” in the $18,000 to
$23,000 category; the 2006 Tucson earned J.D. Power and Associates’ “Highest Ranked Compact
Multi-Activity Vehicle in Initial Quality” in its 2006 Initial Quality Survey. Hyundai Motor America,
“Awards and Accolades.”
483 Congressman Levin, “Testimony as Prepared for Delivery,” written submission to the USITC,
June 20, 2007; and Meyer, "The United States-Korea Free Trade Agreement (KORUS FTA),” written
submission to the USITC, June 20, 2007.
484 Choi, “FTA—A Stepping Stone for Korean Auto and Steel Makers,” April 11, 2007.
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