By I still maintain as long as the Democrats control the Congress this deal will never get done because of the politics involved:
U.S. Trade Representative Ron Kirk will discuss options for resolving auto trade concerns that have long blocked approval of a free trade agreement with South Korea when he meets in Detroit on Friday with industry leaders, a U.S. trade official said.
The trip takes Kirk to the epicenter of U.S. opposition to the free trade deal, which the two countries signed nearly three years ago under then-President George W. Bush.
Ford (F.N), Chrysler and the United Auto Workers union say the pact fails to tear down non-tariff barriers that have kept American cars out of the South Korean market for years.
Seoul says those complaints are exaggerated and notes it will immediately eliminate an 8 percent tariff on U.S. autos under the agreement, while the United States is allowed to phase out its remaining 2.5 percent tariff over three years. [Reuters]
I think this FTA is dead with the current administration beholden to the car industry. With billions of dollars in bailouts given to Chrysler and GM the last thing the administration is going to do is ask them to compete against more competition with so many tax dollars now on the line.
Does anyone think that the US government’s probe into Toyota just coincidentally happened after the US criticized Japan for its own “Cash for Clunkers” program that left out many US automobiles?
2:29 pm on February 20th, 2010 1
"I still maintain as long as the Democrats control the Congress this deal will never get done because of the politics involved…"
I don't get it. Didn't you use to say that the deal was too advantageous to South Korea?
4:10 pm on February 20th, 2010 2
Yes, the Toyota deal is pure pettiness. Those 34 dead motorists should have just lifted their foot off the accelerator. Must be all the television they watched and cheeseburgers they have eaten. Idiots!
4:45 pm on February 20th, 2010 3
Building crap cars with 52 dollar an hour Union Labor is the issue that should be addressed.
6:08 pm on February 20th, 2010 4
Whether they were idiots or not (downshift and/or putting in neutral and then brake) doesn't change the fact that the accidents wouldn't have happened if the cars weren't defective.
6:10 pm on February 20th, 2010 5
Still better cars than what would happen if the car companies could get away with hiring temp workers.
6:39 pm on February 20th, 2010 6
this doesn't really matter for korea
6:46 pm on February 20th, 2010 7
I can see Obama making a grand bargain of pushing for the FTA with GOP acquiescence on health care if one or two major tweaks happen with it.
8:31 pm on February 20th, 2010 8
Americans make crap cars? Korean make the worst cars in the world. You only have one or two brands that are worth a hoot and those are not as good as American cars. Koreans copy every popular car as soon as they figure out it is selling. They have no orginal thought. They do block foreign products; not just cars. They block everything and force their crappy products on their populace. They are the worst people in the world.
8:51 pm on February 20th, 2010 9
I hate to say it but you are wrong about Korean cars being inferior to U.S. cars. The Korean auto industry passed the U.S. auto industry a long time ago. Hyundai vehicles are right up there with Toyota and Honda and Hyundai's are cheaper. With the recent issues with Toyota I would venture to say American's probably trust Hyundai's over Toyota to some degree. It is ashame really, how far the U.S. auto industry has fallen.
9:13 pm on February 20th, 2010 10
The real agenda of the free traders is to break the US unions. Better to see money go to foreign car companies than to an American UAW worker.
11:52 pm on February 20th, 2010 11
The only way for Americans to make better cars is to investigate the heck out of Toyota and make everyone think Toyota makes dangerous cars. Eliminate the strongest competition. Now why would they sign the FTA with Korea when they're trying to get rid of all the competition?
If Hyundai gets any bigger, they'll find something on Hyundai too and make everything think they're dangerous cars. That's why Hyundai shouldn't get too big in America. We know what the stacked game is.
12:05 am on February 21st, 2010 12
That isn't what I have said. From March 2009 this is what I did say:
When my wife came to America she was worried about driving an American car and I finally got her convinced that Fords are good vehicles. Detroit needs to make cars Koreans want to drive to be able to compete in the market place.
2:52 am on February 21st, 2010 13
You'll have to forgive Anthoni for that. His message got stuck in the spam filter for a while. I think he originally sent it in 1986.
Anyhoo, I think that the American-cars-are-crap idea is a strong one in the US, but it's sort of undeserved. Or rather, it's too broadly applied. There are some very good cars — safe, reliable, and affordable — but because the overall reputation of the Big Three is so bad, they don't get a fair notice.
The Big Three are going to have to regroup and start doing things like, say, Hyundai and Kia have done: offer ten-year warranties on everything so that trust is no longer an issue.
5:21 am on February 21st, 2010 14
The car issue is where the Obama administration abandons its rhetoric of carbon limits and shows where its priorities are — the core union political base.
Japan just certified the Hummer as a fuel-efficient car. The reason is the same as what's holding up the KORUS FTA: pressure to reduce or remove gas-guzzler taxes. It doesn't matter that these taxes apply uniformly to domestic and imported vehicles — they're labeled an "unfair trade barrier" by Obama and the Detroit lobby.
The reason Detroit is so keen to remove these engine displacement taxes is that SUV's are the only type of car where they can turn a profit. Economy cars are too competitive and the profits are much lower.
5:51 am on February 21st, 2010 15
If the US sold cars in Korea below the prices of domestic brands with super extended warranties, would they be more popular in Korea? Just a question, no need to PMS out there people.
According to Consumer Reports, as of Oct 2009, Ford is the only domestic brand with "world-class reliablity!" Wow, Ford!!
The major Japanese brands and South Korea's Hyundai and Kia make plenty of reliable vehicles. Of the 48 models with top reliability scores, 36 were Asian. Toyota accounted for 18; Honda, eight; Nissan, four; and Hyundai/Kia and Subaru, three each. (Consumer Reports)
And yes, this is before problems Toyota has had. Although as I've said before, these types of things are not unique in the auto industry.
It will take time, but the US auto industry will come back. Koreans aren't the only ones who can bounce back from economic downturns you know.
5:54 am on February 21st, 2010 16
Yeah, with slave wages and all.
5:55 am on February 21st, 2010 17
Nice anecdotes! Completely expected of course.
6:05 am on February 21st, 2010 18
I might add that a good way to determine the quality of the type of car you are in the market for is to look at Consumer Reports and other sources.
I found this interesting, especially about the Jag, which is still hard to believe.
http://editorial.autos.msn.com/article.aspx?cp-do…
10:02 am on February 21st, 2010 19
Right. The only Hyundai model not recommended by Consumer Reports is the Hyundai Accent. The rest all recommended. The Americans on the other hand… very spotty record.
10:12 am on February 21st, 2010 20
Republicans are expected to gain anywhere from 5 to 10 Senate seats in November 2010. They have a big lead in 5 contests, and are close in 5 others. They would have to win all of the close 5 ones to regain the Senate majority.
1:44 pm on February 21st, 2010 21
This just in from the news, NTHA was found to have been bribed…oops I mean "lobbied" by Toyota to shut their mouths about safety problems in Toyota vehicles. Another big storm brewing now… this will be interesting to see where this is going to go.
And I had to hear how corrupt Korea was for many years from our American friends. Look how they call (what we call in Korea) "bribes", "lobbying" in America.
1:44 pm on February 21st, 2010 22
I guess "lobbying" sounds far better than "bribes".
8:33 pm on February 21st, 2010 23
JohnT,
As I posted once before, Ford had a couple of winners this year. They excluded data from the losers to claim they had world-class quality.
When you look at the real deal, Ford came in 17th overall… three little points above average (compared to Hyundai's 21).
http://www.usatoday.com/money/autos/2008-10-23-cr…
It's only when they cherrypick their lineup to exclude the crap that they talk about world-class quality.
It's a shame that, once, "world-class quality" ment the world copying American products. Thanks to the unions wanting more and more pay for less and less work every year… and the well-lobbied government making sure nothing management does can make them go out of business, American car companies are like Soviet factories… they need to die and start over… but everyone from managment to politicians are sucking everything they can get as it spirals down.
Read Mitt Romney's take on the auto industry. Sadly, what he warned of has already happened… and his predictions are likely to come true.
http://www.nytimes.com/2008/11/19/opinion/19romne…
10:29 pm on February 21st, 2010 24
I'm not sure what country you are from but if you are from Korea I can tell you I currently live here and would not drive a Korean car if someone gave me a brand new one. They are death traps. You are right in letting your wife drive an American car while visiting my country. They are safe. When most Koreans come to the US they don't buy Korean cars they buy US, Japanese, or Euro cars. Even in Korea people who can afford afford it don't drive Korean cars. They are smart.
10:34 pm on February 21st, 2010 25
Is this pay back for Hiroshima-Nagasaki
10:43 pm on February 21st, 2010 26
They only way for Toyota and Hyundai to make better cars is to copy whatever is sucess from the US, block US cars from entering their country then flood (dump) their crappy cars on the US. Well that day has ended. We will not let you do it anymore. It is a level playing field now. Lets see if you can really compete. We will use your own tactics.
12:47 am on February 22nd, 2010 27
Care to explain better your comment? Are you talking about more protectionism?
BTW, Hyundai and KIA’s cars are developed by Europeans in Europe, where quality standards are higher than USA, so those "crappy" cars are modeled after European cars, not Americans (and maybe that’s the key of their success).
Americans copying Korean tactics? I thinks that will be very difficult because Koreans tactic is summed in “doing more for less” while Americans tactic is “doing less for more”. I´m not joking. That’s true, and if USA car makers are serious about adopting Korean tactics, than American society will need to pay a high social cost to do so.
Banks are resisting adopting changes despite of their responsibility in actual financial crisis, why would car makers accept changes???
1:01 am on February 22nd, 2010 28
How cute …
1:56 am on February 22nd, 2010 29
The average UAW worker earns $160,000 lugging nuts onto bolts.
1:57 am on February 22nd, 2010 30
Are you a UAW worker?
3:24 am on February 22nd, 2010 31
Is that what they see on their paycheck or health insurance and other benefits?
3:41 am on February 22nd, 2010 32
So that's why the American Government auto safety organization gave the Hyundai Sonata the top mark for safety, just a week ago.
3:44 am on February 22nd, 2010 33
It's not what they earn, but rather what the automakers spend on retired workers, spread out over the current workforce:
Contrary to an often-repeated myth, UAW members at GM, Ford and Chrysler are not paid $73 an hour. The truth is, wages for UAW members range from about $14 per hour for newly hired workers to $28 per hour for assemblers. The $73 an hour figure is outdated and inaccurate. It includes not only the costs of health care, pensions and other compensation for current workers, but also includes the costs of pensions and health care for all of the retired workers, spread out over the active workforce. Obviously, active workers do not receive any of this compensation, so it is simply not accurate to describe it as part of their "earnings."
4:23 am on February 22nd, 2010 34
Got it. I read somewhere that the health care for retired workers also covers family members of retired workers? And that's crazy.
4:46 am on February 22nd, 2010 35
US couldn't have sold that many cars in ROK with their more popular types of cars like SUV and pickup trucks. No way US couldn't done well in ROK no matter what warranty/price they offered.
It's the road/parking and gas price.
Not sure if you've seen or traveled in Korea but there is a reason Seoul's traffic is a nightmare. And parking in the apartment complexes is out of control too. I think it's gotten better but it's common to see S Koreans 'park' their cars in the 'parking lot' of their huge apartment complexes by leaving the gear in 'Neutral'. This is done because the cars are packed in due to not big enough parking lot. People push one car out of the way to get his car out. Basically self-service valet parking. Can you imagine someone trying to push an SUV out of the way or trying park such a large car in the cramped parking lot? This result of building large blocks of apt without planning ahead that every single household will own a sedan. Now I think the newer complexes have underground parking space etc.
And than there's the gas price. I believe gas price in S Korea is effectively 2 – 3 times of what's paid in US due to higher tax in on gas in Korea.
Now that US is putting out smaller and hopefully better cars they might have a better chance at selling cars in ROK. But US motor companies will have to overcome the bad image from the past, just like Hyundai is trying to do in US even when putting out excellent cars like Genesis and Sonata 2011.
3:00 pm on February 22nd, 2010 36
America used to have some pretty awesome cars, unfortunately the auto companies turned them all into crap. I remember the original Saturn's before GM bought them up, they were awesome cars. No frills but reliable sedan's. GM turned them into crap with horrible design and cheap parts.
Also "Korean made" cars sold in Korea are not the same ones sold in the US. If you can ever get two Sonata's, one sold in the US and another sold in Korea you would see the difference between the two.
Finally, there are several non-tariff trade barriers that are in place to price foreign cars out of the Korean market. One of which is the luxury tax applied to all imported vehicles. This is a VERY large tax, to the amount of 30~50% of the imported car's value. If a single person here doubts me I can show you the price differences in BMW's between ones purchased in the US / Germany and ones purchased "locally".
3:20 pm on February 22nd, 2010 37
The 30 to 50% tax you're talking about (if that figure is correct) isn't mostly an engine displacement tax, is it? Can you provide a link showing the level of import taxes that exist today for imported cars but not for domestic cars?
Showing the difference between a BMW in the US and one in Korea wouldn't show anything. Even Hyundais are more expensive in Korea than in the US. Displacement tax is a huge part of that, and overhead — the cost of rent for car dealerships in Korea is backbreaking for all car companies — makes cars pretty expensive as well.
3:27 pm on February 22nd, 2010 38
Also “Korean made” cars sold in Korea are not the same ones sold in the US. If you can ever get two Sonata’s, one sold in the US and another sold in Korea you would see the difference between the two.
Well, the one sold in the US was probably made in Alabama, for starters.
But before Hyundai and Kia started planting car plants in the South, what evidence is there of this quality differential between Korean cars for domestic consumption and those for export. I have heard that many, many times since I was a teenager, and I believed it because I heard it so often — from Koreans and foreigners both — but then I realized, hmm… I've never actually seen hard evidence of this, only speculation and supposition.
I've owned three cars in Korea, a used Excel, a used Sonata, and a new Kia Carnival. The Sonata gave me no problems whatsoever, the latter only suffering from one major problem (covered under recall) and minor, but cheaply fixed problems. Even the early 1990s Excel only had one significant problem (transmission gave out).
From my experience, the quality of these cars was in line with the quality of their US-sold counterparts according to Consumer Reports.
3:35 pm on February 22nd, 2010 39
Kind of funny Korea would sell cars of less quality to Koreans and charge more for it but I think that is part of what allows them to sell them so cheap in the States. I think Hyundai will be on top some day much like Samsung is on top of the electronics industry.
3:38 pm on February 22nd, 2010 40
If I buy a car in Korea I cannot ship it back to the States because of side impact beams and emissions, those are two that I know of.
3:41 pm on February 22nd, 2010 41
BTW, I own a Hyundai and love it.
4:02 pm on February 22nd, 2010 42
The emissions thing is not a quality issue but an equipment issue, no? A certain type of catalytic converter that was built for cars that might end up being sold in California and other states.
When did you try to ship? How old was the car? I think I read sometime in the early zeroes that those were becoming standard equipment (but I'm going by memory of this, which may be faulty).
6:16 pm on February 22nd, 2010 43
Differences include safety standards, emission regulations, and hazardous materials compliance. And yes the "US made" Korean cars are actually made inside the US and have higher standards then the Korean made ones. This was something I was pointing out because many people were comparing cars made / operated in Korea to cars made / operated in the US.
6:30 pm on February 22nd, 2010 44
Simple the Incheon port authority called me and wanted me to pay the import tax on my car when it arrived. They were not going to release it until I could prove the import tax was paid. This amount was well over USD 10K on a 42K car. I had to jump through hoops to get them to accept my memorandum that states I'm authorized duty free import of goods for personal use (automobiles included). I found out there is an office on the base that handles that explicitly.
This does not include engine displacement because that tax is paid twice. First is on initial purchase of vehicle, I didn't buy from a Korean dealer and therefor didn't pay it. Second is during registration, you pay a set yearly fee based on size of engine. I register through the USFK office and am not required to pay that either. If you import a vehicle and therefor don't pay the engine size tax upfront, then you are required to pay it in its entirety during the registration process.
Ever notice most of the Korean's driving BMW's / Audie's / Lexus's drive a high end model with the smallest engine possible? Its usually to get that engine size tax down. Also many Korean SUV's are actually LPG engines and have a smaller tax (if any) applied to them.
One of my good Korean friends actually works at a BMW dealership here in Korea, this is a topic we talk about many times. The dealers are forced to price foreign cars significantly higher because of the crazy reg's regarding tax's and fee's that must be paid for during purchase. Notice when your at a store you don't see "sales tax" being added, that is because the tax has already been included into the product and is mostly transparent to the user. Different class's of goods have different tax's applied to them. Almost anything made out of Korea is defined as "luxury" and this gets hit the hardest through sales tax.
Case in point is a pair of designer Levi's jeans. At Lotte department store their KRW 250,000 to 300,000 depending on model. On amazon.com their USD 50~60. You honestly think department stores are deliberately pricing themselves out of the market? Now they are making a decent profit, but not %300+ profit. I'll leave you to figure out where the extra cost is coming from, especially since the tax says "made in Korea".
6:51 pm on February 22nd, 2010 45
When did you bring your car in, and what was the "import tax" called in Korean?
1:22 pm on February 23rd, 2010 46
Within the last few years. I can try to get the import office to give me the untranslated request, but I don't speak Korean and this was originally done over the phone. They actually wouldn't release it to me even after I sent them my SOFA information, I had to have the import office send it to them along with this letter in Korean.
If you want to see this in action, try to sell a new US purchased car to a Korean citizen. When you actually attempt this you end up having to pay that damn tax based on the sale value of the car. Or just take a trip to the local registration office and ask them about selling a US bought / SOFA imported car (duty exempt) to a Korean citizen and what the regulations are.
Really, a 335i BMW costs 79+ million won for a base model, but about 40K USD. And that is before the engine tax. Or again the pair of levi's jeans. They sell for 50~60$ USD state side, but Lotte department Levi store has them for KRW 250K+. They could half the price to 125K, still make a killing on profit and rape their competition in the process, yet they don't. Problem is the tax they must pay at time of sale, its retarded. But because its paid for by the store (passed on to the consumer) at time of sale within the country so its not considered a tariff. If this post-import tax was applied to ~ALL~ items then it would be ok, but the method of implication basically sets up all imported goods into the highest tax category.
This isn't necessary a bad thing, the revenue from these "luxury" purchase's goes to help subsidize the local food / production industry. So a wealthy Korean purchasing an expensive foreign car and expensive designer clothing helps to keep the price down on the locally produced items that the not-so-wealthy Koreans use.
It would be like the US taxing cars made in Korea / Japan / Europe and using that money to subsidize the price on economy cars made in the US.
2:13 pm on February 23rd, 2010 47
Really, a 335i BMW costs 79+ million won for a base model, but about 40K USD. And that is before the engine tax.
A 3.8-liter Hyundai Genesis that's fully loaded is just under $40,000, but that same fully loaded car is 60 million won, according to the Hyundai USA and the Korean-language Hyundai Korea websites.
Do you have something showing 79 million won for a base model? I thought it was 81 for fully loaded.
At any rate, there are special VATs on luxury cars that make them not good comparisons. That's partly why a Hyundai Equus sedan can run you about 109 million won, and that's not even the super deluxe edition, which can be 146 million won.
Anyway, at the risk of sounding like I'm splitting hairs, there's a difference between an "import tax" and a fee you must pay to import your car.
So the better comparison for US vehicles intended for the general population would be Honda or Toyota. The price differential between US and ROK prices is not unlike the price differential for Hyundais sold in the US and ROK.
Ultimately the non-tariff trade barriers argument falls apart a bit when you consider that Honda and Toyota and even Volkswagen do so much better than Ford, Chrysler, or GM. Well, that is, if you don't count all the GM Daewoos as GM. Why on earth would we do that?!
12:37 pm on February 24th, 2010 48
I was using the cars as an example. The luxury tax is indeed applied to high end Korean cars (although import fee's are not), but its also applied to ~all~ imported cars regardless. All Korean produced items that are deemed "luxury" items by the government have the tax applied, but nearly all imported goods have it by default.
A car manufacture from another country who produce's a 16K "economy" car (this is one of the biggest sales markets in SK) would not be able to compete against local manufactures because dealers would have to price in the luxury tax.
And yes I have the actual price quotes from the dealership, like I said one of my friends works there. KRW 79m is the base 335i coupe, the M6 is KRW 180m, the 765i is about 180m but can easily exceed 200m once all the amenities are factored in. And seriously, who the hell would buy one of those cars and skimp on features, that's like wearing a nice suit with a pair of sneakers.
I use the word "import tax" to mean any fee / tax required to import and sell foreign made goods to the local population in competition with locally made goods. The actual tax's / fee's use different terminology but are designed to provide an advantage to local goods while circumventing trade agreements.
In this hyper nationalist culture with the craze about cattle beef and corrupt "hands in pockets" relations between business and government, you don't think the government would do everything possible to protect its own economy?
11:50 pm on February 24th, 2010 49
The Sonata is only one of the numerous brands Korea makes. Most of the other cars are crap. Sonata is only good because it was designed by expats.
11:53 pm on February 24th, 2010 50
If you don't think most Korean companies copy everything then block the original (copied) products from entering Korea you are living in a fantasy world. Levis sell for 300,000 won in Korean department stores and $30 in the US. What if the US did this to all Korean products? I think we should and will tell everyone who will listen why from now on.
11:57 pm on February 24th, 2010 51
It's funny to hear to say the US should put out better cars. I work for the government in Korea and we have a fleet of various different Korean cars. Not one of them is even as good as the worse American car. They are uncomfortable, gas fumes come in through the vents, they don't last more than a few years, and they break often. Korea make horrible cars. They are no where near being close to US or Japanese cars. The average Korean doesn't know this because there is a campaign to deceive the Korean populace by demanizing foreign products
11:59 pm on February 24th, 2010 52
Woooooooow; good comment. I see this type of stuff constantly and could write a book on it. I just wish the American public knew this sort of stuff and they would know what to do. I hate Korea and vow to never buy another Korean product ever.
12:04 am on February 25th, 2010 53
It is called dumping and is a model Korea picked up from Japan. They do it in almost every sector. The goal is to drive American businesses out of business then take over that market share.
12:06 am on February 25th, 2010 54
To see how it works buy a Sonata or any car produced in Korea and try to ship it to the states. You will have to bring it up to US specs (safety, emissions, etc). Korean made cars are inferior to US made cars.
12:22 am on February 25th, 2010 55
BTW I own a Chevy and love it