Auto exports hit record $37 billion, hybrids and SUVs drive growth

Korean auto exports reached a record high of $37 billion in first half of 2024 with hybrid and SUV sales driving growth.

Hyundai Motor vehicles wait to be exported at a port in Pyeongtaek, Gyeonggi. [JOONGANG PHOTO]

Auto exports hit another record high of $37 billion in the first half of the year driven by climbing sales of high-margin hybrid cars and SUVs.

Car exports stood at $37 billion during the January-to-June period, a record first-half figure and a 3.8 percent increase from the $35.7 billion logged over the same period of last year, according to data from the Ministry of Trade, Industry and Energy and Korea International Trade Association (KITA).

Half those exports were to the United States, making the country Korea's top car export partner.

Vehicle exports to the United States rose 30 percent to $18.5 billion in the first half of 2024, making up 49.9 percent of the country's total car exports.

Exports to the European Union fell 30 percent in the first half while those to the Middle East slid 18.7 percent.

By car type, exports of EVs dropped 17.6 percent due to stalling global EV demand.

In turn, exports of hybrid cars and internal combustion engine cars like petrol- and diesel-powered vehicles rose. Hybrid exports grew 19.5 percent on year while internal combustion engine cars rose 7.2 percent.

“Korea's EV exports defended well in the midst of unfavorable market conditions and an influx of China's [cheap] EVs,” said Kim Pil-soo, a professor of automotive engineering at Daelim University College. “Exports of hybrid vehicles, the sector that Korean manufacturers have strengths in, sharply expanded along with growing demand.”

Experts eye a rosy outlook for the second half.

Korea Automobile & Mobility Association predicted that Korea's car exports would grow 5.4 percent to $74.7 billion in 2024, a record-high yearly figure.

Those exports will reach $98 billion when accounting for the auto parts, the report said, augmented by “sales recovery in Europe” and the “launch of new EVs.”

But the upcoming U.S. election may pose a threat to Korean manufacturers, experts warn, especially if Donald Trump wins.

While Joe Biden has pushed hard for policies like the Inflation Reduction Act during his term, Trump is likely to reduce the size of clean energy incentives and tax credits.

“If Biden is reelected, the EV market will grow, which could positively affect Korean companies who are doing quite well in the EV race,” said Kim Kyoung-you, a senior research fellow at the Korea Institute for Industrial Economics & Trade.

Trump, meanwhile, vowed to impose a 10 percent tariff on all goods in a U.S. presidential debate with Biden last month.

“Trump emphasizes fossil fuels and has great antipathy for countries with a trade surplus,” said Chang Sang-sik, head of analysis at KITA. “Incentives and benefits on EVs could be cut, which will have an inevitable effect on Korea's auto exports to the United States.”

Korea would likely follow China as Trump's containment target, Chang said.

“While cheap Chinese EVs invade global markets, Korea must tap into new markets like Asean, the Middle East and Africa.”

BY NA SANG-HYEON, SARAH CHEA [chea.sarah@joongang.co.kr]