Korea’s automakers saw their exports to European countries surge 40.1 percent on a year-on-year basis, which could be interpreted as an outcome of the Korea-EU Free Trade Agreement that took effect in early July.
Five carmakers including Hyundai Motor posted 347,207 units in exports to EU countries for the first 10 months of 2011, compared to 247,909 units over the same period last year.
The 40.1 percent growth is noteworthy, considering the growth of their total exports around the world was 13.2 percent over the corresponding period, according to the Korea Automobile Manufacturers Association.
By region, the EU posted the top growth among major export targets, followed by Asia at 32.9 percent, Eastern Europe at 16.7 percent, and Central and South America at 15.3 percent.
Exports to North America increased 11.4 percent while those to the Middle East grew 4.9 percent.
With the implementation of the Korea-EU FTA on July 1, the tariff rate on Korean-made cars with an engine capacity of less than 1.5 liters was lowered from 10 percent to 8.3 percent for cars, and to 7 percent for cars with an engine capacity of more than 1.5 liters.
Some dealers say the trade pact has provided Korean carmakers with great price competitiveness in Europe.
Korea and the EU achieved a breakthrough by agreeing to slash tariffs on cars with an engine displacement of more than 1.5 liters within three years.
Duties on smaller cars will be removed within five years. Seoul currently imposes an 8 percent import duty on European cars, while Brussels imposes a 10 percent duty on autos from Korea.
European carmakers sold more than 32,000 units in Korea last year, while Korean manufacturers exported about 408,000 vehicles to the EU.
But there are also skeptical views over the FTA in the market. An auto dealer admitted that it is good news since most automobiles shipped to Europe are manufactured in Korea.
“Hyundai Motor has a manufacturing plant in the Czech Republic that will eventually roll out 300,000 cars a year. Then, the effect of the FTA will be less than generally expected,” he said.
A brokerage analyst said, “I believe auto parts makers will be more directly benefited by the pact as some parts are still shipped from Korea.”
By Kim Yon-se (firstname.lastname@example.org