Evaluation-South Korea's booming used automobile exports cushion influence of US tariffs

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By Ju-min Park

INCHEON, South Korea (Reuters) -From the muddy grounds of a former amusement park on South Korea’s coast, tens of 1000’s of autos are being packed for cargo abroad as booming used automobile exports assist to mitigate the influence of U.S. tariffs on new automobile gross sales.

Soaked in sweat from the outside warmth, staff are loading and strapping automobiles into containers across the clock for cargo from the makeshift amenities at South Korea’s largest used automobile export hub in Incheon, west of Seoul.

“It’s embarrassing for us to say ourselves our enterprise is a star export merchandise,” stated Kevin Seol, a dealer who ships about 100 used automobiles month-to-month. “However the trade retains rising by numbers so I believe we’re contributing to the nationwide exports.”

South Korea’s auto shipments to the U.S. have declined for six consecutive months since President Donald Trump introduced 25% tariffs.

However its world automobile exports have risen for 3 straight months, supported by record-high second-hand automobile gross sales, which accounted for 1 / 4 of the overall auto exports by quantity and 13% by worth, based on commerce ministry and customs information.

South Korea exported $5.5 billion of automobiles in August, up 9% from a 12 months earlier and the best month-to-month whole on file, the commerce ministry stated. Used automobile exports jumped 35% to $711.5 million the identical month, based on the Korea Used Automotive Distribution Analysis Institute.

The used automobile progress is essentially propelled by insatiable demand for older Hyundai and Kia automobiles in Russia and within the Center East and a weaker received, merchants and consultants stated.

“Exports to the U.S. do not account for a lot of our enterprise,” Seol stated. “Demand from different international locations is robust, so the tariffs have not actually harm us.”

TARIFFS COULD RAISE USED CAR PRICES

South Korea exports many of the used automobiles which can be offered to the Center East, Central Asia and Russia, based on authorities information and merchants.

In these markets, Korean automobiles might be extra enticing than these from export rival Japan as a result of they’re designed for driving on the appropriate aspect of the street, whereas Japan drives on the left, merchants stated.

In South Korea’s largest new automobile export market, the U.S., exports have been hobbled by a 25% tariff that continues to be larger than the 15% price for Japanese and European automobiles, although Seoul is in negotiations for a discount.

However whereas U.S. tariffs are a destructive for the brand new automobile market, they might result in additional demand and better costs for used autos, stated Shin Hyun-do, director of the Korea Used Automotive Distribution Analysis Institute.

“If U.S. tariffs on new automobiles rise, automobile costs will go up. That may result in an increase in automobile costs globally,” he stated. “In that case used automobile costs are prone to comply with go well with.”

Within the first half of the 12 months, South Korea’s used automobile exports jumped 72% to $3.9 billion, with 437,151 autos shipped overseas, accounting for a few quarter of whole auto exports by quantity, Shin stated.

South Korea offered extra used automobiles to the Center East than new autos between January and June and reported a 40% rise in month-to-month common gross sales to Russia, he added.

POOR INFRASTRUCTURE THREATENS GROWTH POTENTIAL

Demand from Russia and its commerce companions like Kyrgyzstan has surged for the reason that outbreak of the struggle in Ukraine.

In response to the invasion, Japan curbed commerce in used autos in 2023 by banning all however used compact automobiles from being offered on to Russia.

South Korea added restrictions in 2024, however just for new or used autos with 2,000 cc engines or bigger, reminiscent of greater SUVs, and a few of these are being offered to Russia via Central Asian international locations, market members stated.

South Korea’s used automobile exports are anticipated to set a brand new file excessive in volumes and worth this 12 months, consultants say, although fast-growing market Syria banned used automobile imports in July, based on state media.

However merchants stated the expansion in abroad gross sales risked being capped by poor infrastructure on the nation’s export hubs, together with the one at Incheon, a dust discipline with makeshift workplaces and insufficient amenities.

“Personal companies lease these grime heaps right here and park their automobiles there,” stated Park Younger-hwa, a dealer who runs the Korea Used Automotive Export Affiliation. “In summer season, situations are so dangerous that patrons with their ft are caught in mud discover it troublesome to examine the automobiles.”

Ruling Democratic Get together lawmaker Heo Jong-sik proposed a invoice in April to ascertain a registration system for used automobile exporters and develop devoted export complexes.

Used automobile exports and cosmetics had been the fastest-growing export industries by worth for small and medium-sized firms within the first half of 2025, based on authorities information.

“Since used automobile exports have already change into one among our nation’s predominant export objects, the federal government ought to step in to handle and foster the trade via insurance policies,” Heo stated.

(Reporting by Ju-min Park; Enhancing by Josh Smith and Jamie Freed)

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