SOUTH KOREA South Korea Fleet Market Now 10% of Auto Market Revised U.S. trade deal with South Korea doubles U.S. export potential, while South Korea’s government plans to boost EV production and bail out the ailing auto parts market with subsidies. BY CHERYL KNIGHT W ith a population of approxi-mately 51.5 million, and an estimated GDP in 2018 of $1.65 trillion, South Korea ranks 11th among the world’s largest eco-nomic powers and fourth in Asia. he country has a high-income economy, an emerging inancial market, and an eco-nomic model focused heavily on exports. South Korea ranks ith in the world as an exporter of goods and ninth in im-ports (ranking 16th in service imports). he main industries in the country based on GDP composition by sector are servic-es (57.6%), industry (39.4%), and agricul-ture (3%) and include electronics, tele-communications, automobile production, chemicals, shipbuilding, and steel goods. It is the world’s largest producer of semi-conductors. he country’s main trade partners are China (24.8% of total exports), the United States (12%), Vietnam (8.3%), Hong Kong (6.8%), Japan (4.7%), and Australia (3.5%). At a Glance: South Korea Population: approximately 51.5 million Estimated 2018 GDP: $1.65 trillion ● T op leet vehicle brands: Hyundai, Kia, Renault, and GM Korea. ● Top industries: electronics, telecommuni-cations, automobile production, chemicals, shipbuilding, and steel. ● Commercial leet vehicle sales: › 2015: 262,000 › 2016: 256,000 › 2017: 263,000 ● ● South Korean Current Auto Market Conditions ● South Korea’s Automotive Market Stats he number of commercial vehicles sold in South Korea rose steadily from 2012 to 2015 (from 234,000 to 262,000), but took a slight dip in 2016 to 256,000. hat num-ber rose again in 2017 to 263,000 and was tracked at 60,000 vehicles as of March 2018. he South Korean business car segment represents about 10% of the total new car sales, which stood at 1,761,404 in 2017, in-cluding passenger cars and light commer-cial vehicles. More recently, new-vehicle sales in the country, including passenger ve-hicle imports, rose 23.8% year over year to 160,380 units during October 2018, bring-ing year-to-date total vehicle sales to 1.48 million units, indicating a 1.1% increase, year over year. his increase is attributed, in part, to increased demand for new-vehi-cle models and a lowered individual con-sumption tax on passenger vehicles in 2018 (from 5% to 3.5%). he top four leet vehicle brands in South Korea are predominantly Korean car manu-facturers, with Hyundai and Kia represent-ing 70% of the market share. Renault and GM Korea round out the top four business leet brands. Overall, U.S.-made vehicles in South Korea represent a niche market, with most foreign models sold in the country com-ing from Japan and Germany. Although, other OEMs such as General Motors Ko-rea (GMK), have been growing their leet presence in South Korea. In 2017, com-mercial sales represented roughly 9% of GM Korea’s total sales. Vehicles are subject to various taxations in South Korea, including Individual Con-sumption Tax, Education Tax, VAT, Acqui-sition Tax, Transportation-Energy-Environ-ment Tax, and Motor Fuel Tax. he revised trade deal between the U.S. and South Korea, signed in September 2018, had a minimal impact on the auto-motive market, but did double the num-ber of cars U.S. manufacturers will be able to export to South Korea each year to 50,000. Also, the agreement now only re-quires those vehicles to comply with U.S. safety standards — rather than comply-ing with South Korean standards — and minimizes South Korean custom restric-tions on incoming goods. ● he South Korean government plans to boost electric vehicle (EV) production in the country — with the help of subsidies — to 430,000 battery EVs (from 56,000 today) and 65,000 fuel cell EVs (from less than 1,000 currently) by 2022. Gov-ernment oicials also called for increas-ing the number of fast-charging stations for EVs to 10,000 by 2022, and the coun-try aims to run all of its trucks and buses with zero emissions by 2030. ● he South Korean government wants to commercialize driverless cars by 2020. In fact, government oicials opened up a city-sized test site — called “K-City” — in 2017 for self-driving cars. ● Hyundai and Kia plan to create a produc-tion system in their South Korea plants for 23 environmentally friendly cars by 2020, including EVs, hybrid electric vehi-cles, and plug-in hybrid electric vehicles. ● he South Korean auto parts industry hit a slowdown in 2018 as a result of an economic decline. In response, the coun-try’s government will provide $3 billion in aid for distressed auto suppliers. ■ Q4 2018 I AUTOMOTIVE FLEET 5
Automotive Fleet Dec 2018: 5
