American cars aren't selling well in South Korea due to consumer perception of U.S. vehicles as clunky and having poor gas mileage, the head of Chrysler LLC's local unit said Tuesday.
U.S. automakers such as Chrysler and General Motors Corp. are lagging far behind Japanese and German rivals in sales in the nation's booming market for imported vehicles.
Sales of imported cars in South Korea are expected to grow more than 20 per cent from a year earlier to 60,000 units this year, but no U.S. models have taken the top-10 sales ranking here.
South Korean consumers have "negative perceptions that U.S. cars are sizable, but have poor fuel-economy," said Ahn Young-seok, the country manager of Chrysler Korea, at a press conference to launch sales of a mid-size sedan Sebring.
To boost sales in South Korea, "The most urgent task is to change those perceptions, but it's difficult to resolve the issue in the short term," Ahn said.
Dr.Sang-yirl Nam estimates that the auto tariff provisions of the Korea-U.S. trade agreement - examined independently of the rest of the provisions of the agreement - would provide Korea a $178 million welfare gain, but cost the U.S. about $20 million.
...warned of a fight in the U.S. Congress that could damage the entire free trade agenda unless the pact is renegotiated to address an "ever-changing pattern" of South Korean barriers to keep out auto imports.
Palmer says that "Ford has emerged as the biggest industry opponent of the free trade agreement."
Seok-young Choi, economic affairs minister at the South Korean embassy responded that, South Korea has no intention to renegotiate.
Choi called Biegun's concern "totally unreasonable" and said the U.S. auto industry was blaming South Korea for its own chronic problems. "The U.S. auto industry has little interest in penetrating the Korean market," as shown by its disregard for Korean consumer preferences, he said.
"The U.S. government should do something for the U.S. auto industry, but why should Korea?" Choi said.
Detroit's opposition to the auto provisions of the Korea-U.S. FTA has become one of the key issues for opponents of the agreement. Both Ford and Chrysler, and the UAW, have come out against the agreement. Many Democrats have echoed their concerns.
In 2006, while Korea exported about 700,000 cars to the U.S., the U.S. only was able to export about 4,500 to Korea. Even setting aside the differences in population and per capita income, this seems like a large difference. There are certainly tariff barriers to U.S. exports to Korea, but the industry has also pointed to other, persistent, non-tariff barriers, as a big concern: Korea's NTBs on foreign autos (Ben Muse, July 8, 2007).
Jeffrey Schott, a senior fellow at the Peterson Institute, reviewed key provisions of the Korea-U.S. FTA in a recent Institute Policy Brief (The Korea-US Free Trade Agreement: A Summary Assessment, August 2007), and doesn't think the auto provisions should be a stumbling block: