Honda is mulling the idea of importing U.S.-made cars into Korea, according to Reuters. Speaking to reporters in Seoul on Wednesday, Honda CEO Takanobu Ito said the Japanese automaker is considering selling more cars imported from the U.S. in the Korean market. A spokesperson from American Honda confirmed to us that the move is being considered, though no official announcement has been made. This move is likely in response to the rising strength of the yen, which has decreased the cost-competitiveness and profitability of Japanese goods. With the U.S.-Korea Free Trade Agreement (KORUS FTA) now pending approval, the reduced tariffs that would result from that agreement could make shipping from the U.S. an attractive option for Honda.
Honda already imports the U.S. version of the Accord into South Korea, but models like the CR-V, CR-Z, Insight, and Civic currently come from Japan. Though shipping cars from Honda’s home country of Japan to neighboring South Korea makes good logistical sense, the strong yen has made that option less profitable. The possibility of lower import taxes from the KORUS FTA is likely an incentive for Japanese automakers to shift production of Korean-market cars to the U.S., where manufacturers also benefit from cheaper labor.
This move follows Toyota’s recent announcement that it will ship Sienna models from the U.S. to Korea. Though Toyota would still benefit from the free trade agreement if passed, a company spokesperson told us that the plan to import the Sienna to South Korea has been in development for some time. Since the current Sienna is produced exclusively in the U.S., options for exporting that model from anywhere else in the world are limited, needless to say. Still, Toyota supports the KORUS FTA, and we’ve previously reported that the automaker was also considering shipping Camry models to Korea from the U.S. for similar cost-saving reasons. Of that potential move, the Toyota spokesperson told us a final decision has not been made, though the automaker is always interested in exploring new opportunities.
Honda’s consideration of the move can also be partially attributed to the March earthquake and tsunami that crippled Japan, which itself contributed toward a loss in market share in Korea to European competitors like Volkswagen and BMW. According to Reuters, sales of Japanese cars in the Korean market fell 21 percent from January through October, while sales of German makes shot up 34 percent. Though importing cars from the U.S. might help Japanese automakers gain on their competition in Korea, it’s unlikely to have a large impact on overall earnings, as Japanese makes comprise a relatively small portion of the Korean market. Reuters reports that Honda sold a total of 5600 cars in Korea last year, while Toyota sold 10,000.
Source: Reuters, Toyota, Honda