Apr 9, 2025
The auto industry in South Korea, which has been affected by tariffs, is receiving a $2 billion support package, with Hyundai and Kia set to gain from it.
South Korea announced an emergency funding package of 3 trillion won ($2 billion) for its automotive sector to mitigate the effects of President Donald Trump’s tariffs.
The government plans to reduce taxes on car purchases from 5 percent to 3.5 percent until June. Additionally, subsidies for electric vehicles will increase to between 30 and 80 percent of price discounts, up from the current 20 to 40 percent, and this program will be extended through the end of the year.
Self-driving technology will be recognized as a national strategic technology, along with accompanying tax incentives.
Furthermore, the government will actively assist automakers in expanding their export markets in the 'Global South,' which includes less developed regions in Africa, Latin America, and Asia where demand is on the rise.
To avoid liquidity challenges, policy financing support for the auto industry will increase to 15 trillion won ($10.18 billion) by 2025, up from the previously planned 13 trillion won.
Hyundai Motor Co. and its affiliate Kia Corp will create a 1 trillion won financing program in collaboration with financial institutions and credit guarantee funds to support auto-parts makers in bond issuance and borrowing.
While the auto industry has welcomed this support plan, they have expressed the need for further discussions about increased tax benefits to stimulate domestic demand.
'There is considerable concern within the auto industry about whether this alone will suffice,' an industry official told Reuters, requesting anonymity to speak candidly.
The South Korean government stated that Trump’s 25 percent tariff on all auto imports to the U.S. is anticipated to substantially impact the industry.
In 2024, South Korea’s automobile exports to the U.S. reached $34.7 billion, which represented 49 percent of its total car exports. The U.S. is Hyundai’s largest revenue-generating market.
Hyundai has announced plans to maintain the sticker prices of its current lineup in the U.S. over the next two months to alleviate customer concerns about the potential impacts of tariffs on dealer inventories.
According to the U.S. Commerce Department’s International Trade Administration, South Korea is the third-largest vehicle exporter to the U.S., behind Mexico and Japan. Bloomberg Intelligence predicts that the tariffs will reduce South Korea's GDP growth rate by approximately 0.1 percentage point.
Trump previously praised Hyundai’s commitment to invest a record $21 billion in the U.S. over the next four years, although this did not exempt South Korea from the president’s expansive tax campaign.
The government plans to reduce taxes on car purchases from 5 percent to 3.5 percent until June. Additionally, subsidies for electric vehicles will increase to between 30 and 80 percent of price discounts, up from the current 20 to 40 percent, and this program will be extended through the end of the year.
Self-driving technology will be recognized as a national strategic technology, along with accompanying tax incentives.
Furthermore, the government will actively assist automakers in expanding their export markets in the 'Global South,' which includes less developed regions in Africa, Latin America, and Asia where demand is on the rise.
To avoid liquidity challenges, policy financing support for the auto industry will increase to 15 trillion won ($10.18 billion) by 2025, up from the previously planned 13 trillion won.
Hyundai Motor Co. and its affiliate Kia Corp will create a 1 trillion won financing program in collaboration with financial institutions and credit guarantee funds to support auto-parts makers in bond issuance and borrowing.
While the auto industry has welcomed this support plan, they have expressed the need for further discussions about increased tax benefits to stimulate domestic demand.
'There is considerable concern within the auto industry about whether this alone will suffice,' an industry official told Reuters, requesting anonymity to speak candidly.
The South Korean government stated that Trump’s 25 percent tariff on all auto imports to the U.S. is anticipated to substantially impact the industry.
In 2024, South Korea’s automobile exports to the U.S. reached $34.7 billion, which represented 49 percent of its total car exports. The U.S. is Hyundai’s largest revenue-generating market.
Hyundai has announced plans to maintain the sticker prices of its current lineup in the U.S. over the next two months to alleviate customer concerns about the potential impacts of tariffs on dealer inventories.
According to the U.S. Commerce Department’s International Trade Administration, South Korea is the third-largest vehicle exporter to the U.S., behind Mexico and Japan. Bloomberg Intelligence predicts that the tariffs will reduce South Korea's GDP growth rate by approximately 0.1 percentage point.
Trump previously praised Hyundai’s commitment to invest a record $21 billion in the U.S. over the next four years, although this did not exempt South Korea from the president’s expansive tax campaign.