Under the just-concluded FTA with the U.S., Korea will lift tariffs of 8 percent on car imports from America. By a twist of fate, that also means Japanese cars manufactured there - and they could have a devastating impact if they hit the Korean market at low prices. Japanese cars made in the U.S. are technically American cars because they are made with U.S. parts and labor. The prices of some German car models made in the U.S. will also likely drop immediately. That, experts say, will spur American automakers to intensify their marketing campaign, including discounts, with the result that all cars will get cheaper in Korea, allowing consumers to select a wider range of cheap cars. For domestic carmakers, that means adapt or face a reduced share in the domestic market.
¡ß Japanese cars made in the U.S.
A Toyota Camry or Honda Accord made in the U.S. will drop to below W30 million (US$1=W937), reducing the price difference with Korean cars to almost nothing. Hyundai Motor¡¯s flagship Sonata 2.4 costs W27 million to W28 million. A Honda Accord 2.4 made in Japan now costs W34.9 million here. But the American consumer price of the Honda Accord 2.4 made at Honda's plant in Ohio is about $26,000 (W24.3 million). Even if additional logistics costs are taken into consideration, the Accord will probably cost less than W30 million here. Toyota has so far marketed the luxury Lexus in Korea but is ready to start selling compact cars any time. Toyota has a total of eight plants across the U.S. where it made about 1.2 million units last year. Models like the Camry, Corolla and Avalon can be ready for export to Korea very quickly.
Honda produced a combined 980,000 Accords, Civics and Odysseys in the U.S. last year. These models are also high on the list of cars likely to be imported. Kim Hak-joo, an analyst at Samsung Securities, said many people are concerned about imports of U.S.-made Japanese cars. ¡°In the case of the Camry, it seems possible to lower the price to W25.7 million,¡± he added.
¡ß German and American cars
German cars made in the U.S. will also likely benefit from duty-free imports. Thus the prices of the New BMW X5 and Z4, and Mercedes-Benz ML350 will drop some W6-7 million depending on the model. As for all-American cars, experts believe that their sales are unlikely to increase dramatically since they are too big and unwieldy and their design is inferior to German or Japanese cars.
According to the Korea Automobile Importers and Distributors Association, the effect of duty-free import will be about 7.4 percent of the price of each car. That means the Chrysler Sebring convertible, the rough equivalent to the Hyundai Grandeur, will get about W2.43 million cheaper, from the current W32.9 million to about W30.47 million. The Ford Five Hundred, an equivalent to the Kia Opirus, will drop about W2.95 million, from W39.8 million to W36.85 million. A staffer with an American car company based in Korea said Tuesday under the FTA his company can possibly lower prices of its cars from next year. ¡°But our customers are already asking us to lower the prices. In fact, we expect a drop in sales in the short term, so we¡¯re not happy.¡±
(englishnews@chosun.com )
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