Korean Car Exports Projected to Decline by 2025, the First Drop in 5 Years

South Korean car exports are set to drop in 2025 for the first time in five years, as automakers shift production overseas and face higher US tariffs. The Korea Automobile & Mobility Association projects exports will fall to 2.71-2.72 million units, down from 2.78 million in 2024 — marking the first decline since the COVID-19 pandemic disrupted global auto trade in 2020.

The numbers tell a clear story of how trade dynamics are shifting. South Korea's car exports crashed to 1.88 million units in 2020 but recovered steadily afterward, climbing from 2.04 million in 2021 to 2.76 million in 2023. Now that growth streak is ending.

The main culprit is weaker shipments to the United States, which remains the biggest overseas market for Korean automakers like Hyundai and Kia. US-bound exports made up 49% of South Korea's total car shipments in the first 10 months of 2024, but they dropped 7.9% year-over-year to 1.1 million units.

Here's where it gets interesting: Hyundai Motor Group opened a dedicated electric vehicle plant in the US in October. The company plans to boost that facility's annual capacity from 300,000 to 500,000 units to serve American customers directly. This shift means fewer cars shipped from South Korea and more built on American soil.

But tariffs are creating another headwind. Even though the US government recently cut tariffs on Korean cars from 25% to 15%, industry officials say the remaining tax burden will still hurt exports. If Hyundai raises retail prices in America to protect profit margins, demand for Korean-made vehicles could weaken further.

The broader implications go beyond just export numbers. Korean automakers are adapting to a world where local production matters more than cross-border trade. Building cars closer to customers helps companies avoid tariffs and supply chain disruptions, but it also means South Korea's role as an export hub is changing.

This trend reflects what's happening across the global auto industry. Companies are moving production closer to major markets rather than shipping finished vehicles long distances. For South Korea, which built its economic growth on exports, that shift represents a significant adjustment in how its automakers compete worldwide.