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Good morning,
ladies and gentlemen.
It is a honor for me to be
here today on behalf of the
European automobile importers.
Before I begin, let me first
give you a short update about
the current situation of the
imported car segment in Korea.
In 2004, despite the sluggish
domestic economy, 23,345 import
cars were sold, a 19.8% jump
from 2003. Even when this increase
seems to be outstanding compared
to the development of the decreasing
domestic market, we are still
talking about a very small niche
of 2.6% within the Korean car
market. Or inverse the domestic
manufactures still have a market
share of 97.4 %, an incomparable
lead position within the world
wide car industry.
That` s why the Foreign manufactures
are still convinced about the
potential of the Korean market
up to 5% market share of imported
cars within the next years.
This potential of the market
is still attracting new players
as well. Rolls Royce and Maybach
brought their distinguished
products to the Korean consumers,
while Audi and Nissan have established
local offices. Early this year,
Volkswagen opened a local subsidiary,
and MINI, the premium compact
brand of BMW, has been launched
in February this year. A clear
signal that the Korean market
is also ready for new concepts.
Looking forward to the remainder
of 2005, we are optimistic about
further growth, especially driven
by the upcoming positive signals
of economy, a wide range of
new products and a stimulation
for the car market by the Seoul
Motorshow 2005. The expectation
is that the market will grow
by around 15% from last year
with sales of 26,500 cars.
Beside this positive perspectives
of the imported car segment
in Korea also the Korean car
industry has firmly established
itself at the global market
within the top 5 or 6 car manufacturer
of the world. In 2004, the Korean
car industry enjoyed record
export performance, topping
the 2 million mark. In particular,
the number of cars sold by Hyundai,
Daewoo and Kia to the 15 major
EU countries reached approximately
590,000. Just comparing these
numbers, 590,000 and 23,000,
we can see that there is a considerable
imbalance in the Korean auto
market. With this in mind, allow
me to make a few comments on
behalf of European automobile
importers.
First of all, a word of appreciation
to the Ministry of Construction
and Transportation for entering
the UN 1958 agreement late last
year. Our Automotive committee
had made a series of requests
to the Korean government with
regards to internationalization
of its vehicle-related regulations,
and joining the agreement is
a big step toward that direction.
It will also provide a major
boost to the Korean manufacturers
who are becoming major players
in the world market, and I hope
that the government will continue
to go ahead in the current direction.
Furthermore we also experienced
some solutions for the acceptance
of technical innovations in
European cars, a trade issue
we presented last year.
Despite the progress made by
the Korean government on one
side, there still remain some
serious trade barriers on the
other side. The subject I want
to focus on is the most serious
barrier for the car importers
in Korea today, one that was
strongly raised in this forum
in 2004 and went into effect
in January 2005.
With all due respect, the Automotive
committee is still arguing on
a subject that has been already
put into regulations because
it will have serious impact
on the European car importers
in Korea.
The subject is the OBD system.
As all of you are aware, in
January 2005, the OBD system
has become mandatory for all
cars sold in Korea. But the
Ministry of Environment regulations
insists on different standards
for gasoline and diesel cars
? the former has to be equipped
with the U.S. OBD II, and the
latter, with the European EOBD
even when there is no additional
benefit for environmental improvements.
The reality is that most cars
headed to the U.S. are equipped
with large gasoline engines,
and the cars for the European
market have small gasoline engines
and the European EOBD. Now,
to ask that the EU automakers
newly to develop the OBD II
system exclusive for the Korean
market, with a 2% market share,
can be perceived as a clear
trade barrier.
In addition, the Korean government
has implemented an energy conservation
policy that focuses on the average
fuel economy (9.6km/ℓ), requiring
again small engines, which will
be restricted for imported cars
as no OBD II is available. So
you can also guess that the
OBD laws will make it more difficult
for compact cars to enter the
Korean market. This seems to
indicate that the average fuel
economy policy and the OBD regulations
are mutually exclusive. And
the average fuel efficiency
standards, established based
on domestic cars, will act as
another trade barrier for the
EU auto makers.
Also the Special Act on Capital
Region Air Quality Improvement,
which is not comparable to any
of the existing Regulations
to reduce Air Quality will be
again a special burden for imported
cars.
Today, many multi-national
companies of the European Union
are making long-running investment
in many different industries
of Korea. Our auto industry
is no exception, as we have
positively contributed to the
Korean economy in terms of investment
and job creation. We do believe
that the input we have made
so far is small but influential
for further development of the
Korean car industry.
It is our humble wish that
the Korean government also recognize
the value of the presence and
contribution of the import car
industry.
We once again ask the government
to continue its efforts to make
things better for foreign automakers
in Korea in defining processes
within establishing new regulations,
which don’t have a discrimination
to imported cars.
Thank you for your attention.
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