China's Auto Exports Enter the 12 Million Era... South Korea's Exports and Domestic Market Under Pressure [C-Shock: K-Industry on the Brink | Automotive] (1)

Share of Total Vehicle Imports Nears 50%
Imports Top 100,000 for the First Time
Global Price Competition Could Hurt Domestic Automakers
Pressure on Export Profitability and Market Share

Editor's NoteChina's industrial offensive is eroding the markets of South Korea's key industries. The automotive industry is already at the center of a China-driven shock. China's auto exports are expected to exceed 12 million vehicles this year, while South Korea's imports of Chinese-made vehicles topped 120,000 through August. As the United States and Europe move to curb Chinese electric vehicles, concerns are growing about a balloon effect, in which Chinese vehicles with nowhere else to go flood into South Korea. The shockwaves are not limited to the automotive industry. In the biotech and semiconductor sectors, China is also shaking up markets for South Korean companies by leveraging its price competitiveness, large-scale production capacity and rapid technological progress. In its series "China Shock: K-Industry on the Brink," The Asia Business Daily examines the impact that China's excess supply, technological advances and overseas expansion could have on South Korea's automotive, biotech and semiconductor industries.

Chinese auto exports are rapidly spreading beyond Russia and Latin America to developed markets such as Europe and Australia. An offensive built on price competitiveness and electrification technology is reshaping the competitive landscape of established auto markets.

On October 12, the China Passenger Car Association (CPCA) projected that China's auto exports would reach about 12 million vehicles this year. According to China's General Administration of Customs, the country exported 7.45 million vehicles from January to August this year, up 51% from the same period last year. Exports in August alone also topped 1 million vehicles. This was about 44% higher than the 8.32 million vehicles exported in the whole of last year.

China's auto industry is seen as having entered a new phase in the scale of supply it has secured in overseas markets. Chinese automakers have grown primarily in the domestic market, but recently they have been expanding their export destinations beyond emerging markets such as Russia and Latin America to developed markets such as Europe and Australia. As they expand overseas sales networks by drawing on the price competitiveness and electrification technology they have built up in vehicle production, export volumes are also rising rapidly.

By destination, Russia received the most Chinese vehicle exports from January to August this year, at 638,224 vehicles. Brazil followed with 480,403, then the United Kingdom with 365,672, Australia with 326,938, Belgium with 322,562, and Mexico with 320,844. Exports to the Philippines totaled 214,359 vehicles, Italy 209,258, the United Arab Emirates (UAE) 196,117, and Algeria 190,045. This indicates that Chinese auto exports are spreading beyond emerging markets such as Russia and Latin America to developed markets such as Europe and Australia.

The surge in Chinese auto exports is heightening concerns across the global automotive industry. In a recent interview, Jim Farley, chief executive officer (CEO) of Ford Motor, said, "Chinese automakers are using Europe as an initial foothold and rapidly expanding their market share in several markets, including Australia and Mexico." He added, "The future of the U.S. industry depends on how we appropriately manage this issue by creating a level playing field."

Countermeasures by various countries are also gathering momentum. Europe recently reached an agreement with China to halve imports of Chinese-made hybrid vehicles. Although the specific reduction has not been disclosed, imports are expected to fall by around 400,000 to 500,000 vehicles a year. The United Kingdom is also considering imposing tariffs on Chinese vehicles. The European Union (EU) has identified the UK as a potential route for Chinese vehicles to circumvent restrictions on exports to Europe and is calling for tariffs on Chinese electric vehicles. The UK did not join the EU in imposing tariffs on Chinese electric vehicles in 2024, and Chinese manufacturers now account for 16% of the UK's new-car market this year as a result.

The concern is that U.S. and European restrictions could place a burden on the South Korean market. The higher the barriers major markets erect against imports of Chinese vehicles, the more likely Chinese automakers are to redirect excess supply to other markets. This has raised concerns that South Korea could become an alternative destination for Chinese vehicles, as China is already expanding its export markets by leveraging its price competitiveness and large-scale production capacity.

Imports of Chinese-made vehicles into South Korea are in fact rising rapidly. From January to August this year, South Korea imported 120,024 vehicles from China, accounting for 44.5% of the 269,866 vehicles imported overall during the same period. This was up 85.2% from 64,814 vehicles in the same period last year. This is also the first year that imports of Chinese-made vehicles have exceeded 100,000.

South Korea's auto industry has limited capacity to respond. Hyundai Motor and Kia remain competitive in major markets such as the United States and Europe, but they cannot easily mount a volume offensive by simultaneously offering low-cost electric vehicles, hybrids and internal combustion engine vehicles, as Chinese automakers do. If China's excess supply triggers global price competition, South Korean automakers' export profitability and market share will inevitably come under pressure.

An automotive industry official said, "Many of the Chinese-made vehicles entering South Korea are not only Chinese-brand vehicles but also vehicles from global brands manufactured at factories in China, so this cannot be viewed solely as an expansion of Chinese brands." The official added, "With the downturn in China's domestic auto market continuing for a prolonged period, the volume of vehicles coming from China could increase further."

This content was produced with the assistance of AI translation services.