FTA boosts European car sales in Korea

European carmakers have far surpassed Korean companies in vehicle sales growth since the implementation of the Korea-EU Free Trade Agreement on July 1.

Hyundai Motor and its affiliate Kia Motors saw their yearly sales growth inch up 2.7 percent at home, according to the Korea Automobile Research Institute.

In contrast, companies from Germany, the U.K. and France posted 27.4 percent growth between July and September on a year-on-year basis in the Korean market, data from the Korea Automobile Importers and Distributors Association showed.

German automakers such as BMW, Mercedes-Benz, Volkswagen and Audi recorded the highest growth of 28.4 percent by selling 18,602 units during the three months, compared to 14,483 units over the same period last year.

British brands including Jaguar, Land Rover, Rolls-Royce and Bentley sold 1,575 units with growth rate of 27 percent. French companies such as Peugeot and Porsche saw their sales grow 26.3 percent with 709 units.

Dealers attribute their sales growth to the cutting of vehicle prices as tariffs on import vehicles were lowered under the FTA.

In June, German automakers operating here lowered prices by 1 to 2 percent in expectation of a lower tariff on their imports with the trade pact.

Korea currently levies an 8 percent tariff on European cars but the FTA requires them to be entirely tariff-free by 2016.

Employees for the import brands say they do not anticipate higher profits from the tariff cut, but they expect sales to go up in the medium-term as lower prices certainly appeal to more buyers.

BMW Korea lowered car prices by 1.43 percent in June, which is about 900,000 won ($800) off the BMW 528i sedan priced at 67.9 million won.

Mercedes-Benz Korea made price cuts of 1.44 percent, or by 1 million won, for the E300 Elegance sedan and Audi Korea cut 1.41 percent, or by 700,000 won, for the A4 2.0 TFSI Quattro.

Peugeot and Jaguar-Land Rover also followed the case in the local market. Volkswagen Korea began cutting prices for the Golf and CC models in September.

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