• South Korea's car exports have dipped for the first time in two years due to weak demand for eco-friendly vehicles.
• The decline in exports contrasts with a 12.6% increase in imports, indicating a shift in the eco-friendly vehicle market.
• Export performance varied by destination, with increases to the US, Canada, and Saudi Arabia, but decreases to Australia, Britain, and France.
• The industry faces challenges due to high borrowing costs and a slowdown in global electric vehicle demand, but the rise in hybrid vehicle sales provides some optimism.

South Korea, a global leader in the automobile industry, has experienced a significant downturn in its car exports for the first time in over two years. The third quarter of 2024 saw a decline in the demand for eco-friendly vehicles, particularly in Europe, leading to a 4.7% decrease in car exports compared to the same period in the previous year.

The Korea Customs Service reported that South Korean car manufacturers exported passenger cars worth US$13.96 billion during the July-September period. This marked the first on-year fall since the first quarter of 2022, when car exports slightly decreased by 0.6%.

Shift in Eco-friendly Vehicle Market

In terms of volume, the exports of South Korean vehicles fell 3% on-year to 590,000 units. This decline in exports is a stark contrast to the 12.6% increase in imports, which amounted to $3.04 billion in the third quarter. This is the first on-year increase in imports since the fourth quarter of 2023. The decrease in exports is largely attributed to the drop in overseas sales of eco-friendly cars, which fell 1.27% on-year to $5.42 billion in the third quarter.

The demand for electric cars, in particular, plunged 44.4% to $2 billion. However, it's worth noting that sales of hybrid vehicles reached a record high of $3.01 billion, indicating a shift in consumer preference within the eco-friendly vehicle market.

Varied Export Performance by Destination

The export performance varied by destination. Car exports to the United States rose 1.2% in terms of value in the July-September period. Exports to Canada and Saudi Arabia also saw significant increases, advancing 30.2% and 5.2% respectively. However, demand from Australia, Britain, and France experienced a downturn.

Australia's demand fell 7.4%, while Britain and France saw a more substantial decrease, with demand tumbling 8.3% and 27.5% respectively. The average price of cars shipped in the third quarter also decreased, sliding 1.7% on-year to $23,562. The price of imports sank even more, down 10.7% on-year to $40,711.

The decline in South Korea's car exports is reflective of the broader challenges faced by the global automobile industry. New automobile sales during the first nine months of the year fell over 8% from a year earlier. This is largely due to high borrowing costs and a slowdown in global electric vehicle demand, as indicated by industry data.

This downturn in South Korea's car exports is reminiscent of the global financial crisis in 2008, when the country's car exports fell by 5.3%. The current situation, however, is unique in that it is driven by a decrease in demand for eco-friendly vehicles, particularly electric cars.