Seoul: South Korea's vehicle exports are anticipated to decrease in 2025, marking the first decline in five years, attributed to increased overseas production and U.S. import tariffs, according to industry sources.

According to Yonhap News Agency, the Korea Automobile and Mobility Association (KAMA) has estimated this year's vehicle exports to range between 2.71 million to 2.72 million units. This represents a decrease of 2.3-2.6 percent from the previous year's 2.78 million units. If this projection is accurate, it would signify the first annual decline since 2020, a year impacted by the COVID-19 pandemic that disrupted global vehicle shipments.

In 2020, vehicle exports dropped to 1.88 million units from 2.4 million the previous year. Since then, shipments have seen steady growth, increasing from 2.04 million units in 2021 to 2.76 million in 2023, as per KAMA data. The expected decline this year is primarily attributed to reduced shipments to the United States, which remains the largest overseas market for Korean car manufacturers.

From January to October this year, South Korea exported 2.25 million vehicles, with approximately 460,000 units projected to be shipped in the final two months of the year. During the first ten months, exports to the U.S. accounted for 49 percent of the total, with shipments to the market declining by 7.9 percent year-on-year to 1.1 million units.

The decrease in exports coincides with Hyundai Motor Group's launch of Hyundai Motor Group Metaplant America (HMGMA) in October, a dedicated U.S. electric vehicle plant. The group intends to expand the plant's annual capacity from 300,000 to 500,000 units to cater to local demand.

Although the U.S. government recently reduced tariffs on Korean-made cars from 25 percent to 15 percent, industry officials suggest that tariff burdens are still likely to impact exports to the American market. An industry official mentioned that if Hyundai Motor Group increases U.S. retail prices to maintain profitability, local demand for Hyundai and Kia models may diminish, potentially resulting in further declines in shipments.