American cars are losing their appeal in the South Korean market. Despite efforts such as new car launches to reverse this trend, U.S. automakers have been unable to keep up with market demand.
Sales of imported U.S. vehicles - Jeep, Lincoln, Ford, Cadillac, Chevrolet, GMC - stood at 5,851 units in June, down 29.8% from 8,334 units in the same period a year earlier, the lowest figure in five years. This figure excludes the sales of Tesla’s electric vehicles.
Industry experts point out that U.S. carmakers have failed to adapt to market changes. Their product lineup is still centered around internal combustion engines and lacks hybrid vehicles that have gained popularity in both the domestic and imported car markets. Although they have been introducing plug-in hybrid vehicles (PHEVs), these models are pricier, costing over 100 million won. While Japan’s Lexus sold 6,324 hybrid vehicles in the first half of this year, six U.S. brands sold only 142. They have also lagged behind Tesla in terms of EV sales.
Frequent price hikes have also eroded consumer confidence. U.S. automakers have adjusted prices multiple times, citing rising costs due to the covid-19 pandemic and the shortage of automotive chips. These cost increases were passed on to consumers, even those who had already purchased cars and were waiting for delivery. “Price hikes were applied even to consumers waiting for delivery after the contract was signed,” said an industry insider. “Prices gradually rose by 30% to 40%, which made it difficult for American brands to compete with German luxury carmakers.”
A gradual decline in sales further reduced the influence of American cars in the Korean market. Jeep has lost showrooms to Chinese electric car maker BYD, which is preparing to enter the market. Ford has reportedly been preparing to withdraw from the market since the beginning of the year. Ford Korea will hand over the domestic import and sales rights of Ford and Lincoln to Sunin Motors, according to people familiar with the matter.
U.S. carmakers are launching new cars and reorganizing their operations in response to sluggish sales. In January, Jeep introduced an updated model of its flagship Wrangler, the 2024 Jeep Wrangler 4xe, and launched the electric Avenger SUV in Korea.
“We’re overhauling our network to make the organization run more efficiently,” said a Stellantis Korea official. Cadillac also introduced its first electric vehicle, the Lyriq, in May.
