Korean car imports from China poised to surpass $760 mn in 2023

Tesla Model Y [Courtesy of Tesla]

Imports of automobiles produced in China into South Korea are forecast to exceed 1 trillion won ($758 million) for the first time in 2023, as global automotive companies expand the export volume of their made-in-China vehicles to Korea.

According to data from the Korea Automobile & Mobility Association and the Korea Trade Statistics Promotion Institute, the total value of passenger cars imported from China from January to October 2023 was around $730.65 million. If this trend continues until the end of the year, it is projected that the import value of Chinese passenger cars to Korea will top the $800 million mark.

The import value of Chinese passenger cars has sharply increased over the past three years. Annual passenger car imports from China have more than doubled each year, from 66.1 billion won in 2020, 174.3 billion won in 2021, and 418.7 billion won in 2022. The cumulative total already exceeded 467 billion won as of August 2023, surpassing the annual record of the previous year.

The surge is largely driven by electric vehicles. From January to October 2023, the total value of Chinese-made EVs imported to Korea totaled 703.4 billion won, or 74 percent of the total import value of Chinese passenger cars. In August alone, the import value of Chinese electric passenger cars stood at 200.4 billion won, 11 times the monthly average import value from January to July.

Leading the lineup of the import into Korea is Tesla Inc.’s midsize sports utility vehicle (SUV), Model Y. Previously, Model Y vehicles sold in Korea were produced in the United States, but Tesla has been selling vehicles manufactured in Shanghai in the Korean market since September 2023. The China-made Model Y, equipped with lithium iron phosphate (LFP) batteries, has a shorter range per charge compared to the U.S. Model Y with nickel-cobalt-manganese (NCM) batteries, but its sale price is about 20 million won cheaper. When discounts and subsidies are applied, the China-produced Model Y’s price is in the upper 40 million won range.

Thanks to this pricing strategy, the Model Y has been gaining popularity in the imported car market since September and the cumulative number of newly registered Tesla Model Y vehicles was 9,544 units as of October 2023.

The upward trend in the import of EVs produced in China is expected to intensify in 2024, and Volvo Car Korea Co. began pre-contracting for the small electric SUV, EX30, in November. The EX30’s price will be in the 40 million won range with subsidies, and Volvo will begin delivery to buyers in the first half 2024, with the company aiming to sell around 2,000 units annually.