U.S.-made cars still unpopular under FTA

U.S. automakers are still posting sagging car sales in Korea despite the free trade agreement between the two countries that took effect two months ago.

Three U.S. companies ― General Motors, Chrysler and Ford Motor ― grabbed only 6.1 percent of the nation’s import car market with combined sales of 656 units in April.

While their market share has stayed below 10 percent among import brands over the past few years, the three players have been pinning hopes on the Korea-U.S. FTA, implemented on March 15, in terms of price competitiveness.

In contrast, European carmakers had 76 percent market share with sales of 8,108 units last month, followed by Japanese players with 17.8 percent and 1,904 units.

“Though the import automobile market is expanding continually, challenging the dominant position of Hyundai and Kia, the trend is not applicable to American players at least at the present stage,” said an executive in the import car industry.

He said it seems that a large portion of Korean consumers prefer European brands to made-in-U.S. cars where prices are similar.

“In terms of brand image and fuel efficiency, I think most European brands surpass them. But consumers can afford to purchase upper segment U.S.-made cars at cheaper prices,” he said.

A spokeswoman for Chrysler Korea downplayed the situation, saying, “The FTA has paved the way for us to expand the vehicle model line-up.”

She said the company will increase its market share on a gradual basis.

“We have positive view on future sales. Only two months have passed since the FTA went into effect.”

Chrysler saw its sales fall to 282 units in April, compared with 338 units a month earlier.

Ford also suffered a drop from 416 units to 340 units over the corresponding period, despite its active marketing and slashing consumer prices.

Monthly sales for GM, whose main line is the Cadillac series, are at about 50 units. GM Korea’s Chevrolet sales are excluded from the list as the model is produced at Korean factories.

Some think tanks predict that imports from the U.S. will jump to 75,000 units per annum under the bilateral pact, from fewer than 10,000 units currently.

Under the FTA, the tariff on U.S.-made cars has been lowered from 8 percent to 4 percent. The 4 percent tariff will be lifted completely in four years.

In February, U.S. President Barack Obama said, “Thanks to the bipartisan trade agreements I signed into law with you in mind, there will soon be new cars on the streets of South Korea imported from Detroit, Toledo and Chicago.”

By Kim Yon-se (kys@heraldcorp.com)