As American car makers see sales numbers climb in South Korea due to falling tariffs, companies like Chrysler are making a renewed advertising push for the local market. Image: Chrysler Motors.

Detroit’s Big Three Enjoying Record High Sales in Korea since FTA


It has been three years since the US-Korea Free Trade Agreement (KORUS FTA) was signed and implemented. It’s still too soon to evaluate the long term impacts of the FTA on the two economies, but the US automotive industry is clearly benefiting from the agreement already. Sales of American cars in South Korea have been continuously increasing since 2012, and the remaining tariffs on US automobiles will be fully phased out by 2016.

According to Korea Automobile Manufacturers Association data (subscription required), GM, Ford, and Chrysler, known as the Detroit Big Three, are enjoying double-digit sales increases in the Korean automotive market. In the last three years, sales have increased 20.6% annually. Before the FTA was signed, US manufacturers only sold 13,669 cars to Korean consumers. The number more than doubles to 28,361 cars once KORUS went into effect, as both the US and Korean governments agreed to immediately cut the tariff from 8% to 4%. Sales in 2013 climbed to 31,654 units, and the number reached 40,000 in 2014. Once Korea abolishes the remaining tariff on American cars in 2016, sales are expected to climb even higher as prices come down for Korean consumers.

Looking to boost the trend even further, the Big Three carmakers are strengthening their marketing strategies directed at Korean consumers. Ford launched five new models, including its newest Mustang, in the Korean automotive market earlier in 2015. Chrysler also unveiled its new Chrysler 200 in Seoul, which will serve as the first international market for that model. GM Korea has announced a long term goal of selling 7,000 Cadillacs annually by 2018, targeting specifically the high local demand for luxury cars.

Korean consumers’ perception of American cars is improving as well. American cars once were the best-selling imported automobile in Korea. After the Asian financial crisis in 1997, Koreans shifted towards buying German and Japanese cars, thinking that American cars were heavy and not fuel-efficient. Now, American brands have recovered their reputation. In January of 2015 alone, American carmakers sold 4,442 units, outnumbering the 4,065 Japanese cars sold in the same month. That contrast could be substantially greater by next year as the final stages of the KORUS terms on cars are implemented.

Cheolwoo Lee is an Asan Academy intern at the East-West Center in Washington.