Ministry of Trade Industry and Energy of Repu : Korea’s automobile exports return to growth in 2017

The Ministry of Trade, Industry and Energy announced on January 16 that Korea's exports of automobiles returned to growth in 2017, while production and domestic sales slowed.

Automobile exports increased 3.9 percent year-on-year to $41.7 billion in 2017 after two years of contraction. Exports in value grew although the number of vehicles shipped abroad contracted 3.5 percent to 2,529,153.

Car production in 2017 decreased 2.7 percent to 4,114,913 units from a year earlier. Domestic sales inched down 1.8 percent to 1,793,268, according to data from the Korea Automobile Manufacturers Association and the Korea Automobile Importers and Distributors Association.

Automobile exports in terms of value expanded despite the slight decline in the number of exported vehicles as Korea sold overseas more sports utility vehicles (SUVs) and eco-friendly cars-vehicles in relatively high-value segments. SUVs accounted for more than 50 percent of the total car exports, reflecting the increase in global demand for this segment. Outbound shipments of eco-friendly cars more than doubled to 176,842 units, representing 7 percent of the total exports.

By region, exports to the European Union (EU) increased 30.1 percent, largely due to the improved European economy and the removal of tariffs under the Korea-EU Free Trade Agreement (FTA). Shipments to Russia soared 51.5 percent as the Russian economy recovered amid higher oil prices.

Exports to the U.S. dropped 8 percent as its car market shrunk. Shipments to the Middle East, and Central and South America decreased 12.7 percent and 11.3 percent, respectively, amid the economic slowdown in those regions.

The number of vehicles produced by five domestic carmakers - Hyundai Motor, Kia Motors, GM Korea, Ssangyong Motor, and Renault Samsung Motors - decreased due to strikes as well as sluggish domestic sales and exports.

Domestic vehicle sales contracted as a result of a dip in consumer sentiment. The number of cars produced and sold in Korea decreased 1.9 percent to 1,542,522 due to weakened demand for small and compact vehicles. Sales of imported cars inched down 0.4 percent to around 251,000 units despite the suspension of sales by certain European carmakers.

While the Korean automotive industry in general slowed down in 2017, the eco-friendly vehicle segment posted a strong performance. The domestic sales and exports of eco-friendly cars jumped 42.2 percent to 97,802 units and 126.6 percent to 176,842 units, respectively. Domestic sales were boosted by government subsidies for eco-friendly car purchases and newly launched vehicle models, while higher global demand led to the growth in exports.

In December, monthly automotive production shrank 33.9 percent year-on-year to 287,311 units and domestic sales fell 17.5 percent to 153,504 units. Exports of automobiles in terms of value declined 34.2 percent to nearly $3 billion, while the number of vehicles shipped overseas decreased 40.4 percent to 177,897. Exports of automobile parts contracted 17.1 percent to $1.8 billion.

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