Why GM and Ford struggle in Korea: Trump blames rules, consumers say otherwise

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Why GM and Ford struggle in Korea: Trump blames rules, consumers say otherwise

Published: 26 May. 2025, 15:00 Updated: 26 May. 2025, 18:54

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

GM Korea CEO Hector Villarreal introduces Cadillac's latest Escalade large SUV in an unveiling event in Gwangmyeong, Gyeonggi, on April 16. [YONHAP]

[EXPLAINER]

The sales of legacy American automakers barely exceeded 6,300 units last year in Korea — representing less than one-tenth of the volume moved by a single German brand. It wasn’t a plunge off a cliff, but a gradual fade from relevance.

U.S. President Donald Trump blamed Korea’s "unfair" automobile regulations as “trade barriers” that hinder the U.S. automakers’ expansion, while local consumers point elsewhere: outdated specs, weak after-sales service and a poor understanding of Korean drivers’ preferences.

American carmakers sold 40,879 vehicles in Korea in 2024, just 15 percent of the overall foreign car market, according to data from the Korea Automobile Importers and Distributors Association.

Even that modest market share owes much to Tesla, which accounted for approximately 72 percent of U.S. car sales, or 29,750 units, in Korea last year. During the same period, German brands like BMW and Mercedes sold 166,015 cars.

Their market performance has only worsened with time, with the sales of U.S. carmakers coming in at 799, accounting for a mere 5.24 percent of the foreign vehicle market in January this year, lagging far behind German, Japanese and Swedish brands. Ford only sold 366 cars in January, while GM sold 174 and Tesla five. BMW sold 5,960 vehicles, Lexus 1,126 and Volvo 1,033 units.

High upkeep and big size

Ji Jun-sung, a 41-year-old businessman in Seoul, recently switched his car from a Ford Explorer to a Mercedes E300, disappointed by its underwhelming power and subpar after-sales service.

“It feels like American cars tend to feel clunky when accelerating, lacking the smoothness of their counterparts among foreign brands,” said Ji, a car affecianodo who also has owned a BMW X7, Audi A7, Lexus 350 hybrid and Mini Cooper, adding that he has “no plans of purchasing a car from a U.S. brand soon.”

“In terms of durability, in my case, German cars typically require service care every 15,000 to 20,000 kilometers [9,320 to 12,427 miles], whereas Ford needed maintenance every 8,000 to 10,000 kilometers,” Ji said. “The underbody of American cars tends to corrode more quickly than that of German vehicles.”

Ford's updated Explorer large SUV is being introduced on Nov. 12 in Seocho District, southern Seoul. [YONHAP]

Poor fuel efficiency is also cited as a drawback. The fuel economy of the Ford Explorer, powered by a 3.5-liter gasoline engine, stands at 7.7 kilometers per liter, while the Chevrolet Traverse, a similarly sized vehicle with similar engine specs, generates 8.3 kilometers per liter.

Hyundai Motor’s Palisade, on a 3.5-liter gasoline engine, boasts a fuel economy of 9.8 kilometers per liter, and Honda’s Pilot SUV at 8.4 kilometers per liter.

“Above all, high parts prices make American cars costly to maintain. Their marketing and product strategies often overlook the realities of the Korean market, favoring oversized models designed for U.S. roads so that vehicles are ill-suited to Korea’s narrower streets and dense cities,” said automotive engineering professor Lee Ho-geun from Daeduk University.

“Korean consumers are widely recognized for their sophisticated automotive knowledge and selective standards — approaching car buying with near-professional discernment,” Lee added.

No major U.S. automaker offers hybrid models in Korea, despite hybrids being the most sought-after powertrain among local consumers.

‘No unfair regulations’

Trump claims that Korea’s unfair “trade barriers” toward foreign automakers hamper their sales growth — a point many experts dismiss as baseless.

Under the 2016 Free Trade Agreement, tariffs on U.S.-made vehicles were eliminated, effectively removing government-imposed price barriers.

Even in negotiations during Trump's first term in 2018, Korea conceded by allowing U.S. automakers selling fewer than 50,000 units to be deemed compliant with local regulations, without requiring full adherence to Korea’s strict safety standards. This exception applies to all major American brands, including GM, Ford, Tesla and Stellantis.

Korea permits only amber-colored turn signals for vehicles, in line with safety visibility standards. However, some imported American cars are equipped with red rear turn signals, and Korean authorities currently approve these models for use on domestic roads.

Korea also revised its emissions-related regulations under the Clean Air Conservation Act to address the vagueness of the law, which has been frequently cited by the U.S. government as a major trade barrier in the U.S. Trade Representative (USTR)'s "National Trade Estimate Report on Foreign Trade Barriers" for eight consecutive years since 2018.

The annual report pinpointed the vagueness of the “significant” terminology when carmakers are “required to obtain either a modification certification [for a substantial modification of ERC] or prepare modification reports for insignificant changes."

However, Korea’s Ministry of Environment in July already added a list of “significant” auto components directly linked to emissions under Paragraph 1, Article 67 of the Enforcement Rules.

"Under the FTA, Korea has arguably extended considerable regulatory flexibility to American automakers. For instance, some Teslas are allowed on Korean roads despite lacking emergency escape features required of local models,” said Kim Pil-soo, a professor of automotive engineering at Daelim University College, who also serves as chairman of the Korea Electric Vehicle Association.

“The reason U.S. brands struggle in the Korean market isn’t regulatory — it’s product quality. Poor fuel efficiency, high maintenance costs, and underwhelming specifications make them a tough sell, even when sticker prices are comparable."

U.S. President Donald Trump holds the 2025 National Trade Estimate Report on Foreign Trade Barriers by the Office of the United States Trade Representative during an event to announce new tariffs at the White House on April 2 in Washington. [AP/YONHAP]

BY SARAH CHEA [[email protected]]