South Korea is a major player in the global automotive industry and is the third largest automobile market in East Asia. The country’s total domestic auto production reached around 4.5m units in 2013, with passenger cars accounting for 91% of production. Imported cars make up 12% of the car market and are almost exclusively luxury passenger vehicles. South Korea is also the world’s fifth-largest auto parts manufacturer, following China, Japan, the US, and Germany. Major auto parts manufactured by Korean companies include brake and steering systems, airsuspension systems and chassis modules.
Impact of the EU-Korea FTA
Implemented in July 2011, the EU-Korea FTA has positively affected bi-lateral trade in automobiles and auto parts, resulting in the removal of 97% of tariffs and all import levies on automotive items and auto parts. South Korea is now the top importer to the EU in terms of automobile units, and exported around 381,000 units to the EU in 2011. Over the same period, South Korea imported some 80,000 European passenger luxury cars. The growing demand among Korean consumers for foreign cars is expected to increase the number of imported cars to the country.