Due to the 25% tariff on imported cars from the United States, the total domestic automobile production dropped last month. This decline was attributed to Hyundai Motor Group's focus on reducing the tariff burden by depleting local inventory, leading to a decrease in exports to the U.S. and domestic production.
According to the Korea Automobile & Mobility Association (KAMA) on the 24th, the total domestic automobile production last month was 358,969 units, a decrease of 3.7% compared to the same period last year. Last month, mid-sized automakers such as GM Korea, Renault Korea, and KG Mobility increased their domestic production, while Hyundai Motor's output decreased by 6.0% to 157,314 units, and Kia's production fell by 3.8% to 134,335 units.
It is interpreted that domestic production decreased due to the reduction in exports to the U.S. resulting from the U.S. tariff. To avoid the high tariff burden, they reduced the volume of exports by making the most of their 'non-tariff inventory' that was stockpiled ahead of the implementation of tariffs by the Donald Trump administration.
In May, actual export volumes of Hyundai Motor and Kia to the U.S. totaled 77,892 units, reflecting a 21.5% decline compared to the same period last year (99,172 units). Hyundai Motor's exports decreased by 31.4% to 42,574 units, while Kia's dropped by 4.8% to 35,318 units.
An industry official noted, "The decrease in domestic production could negatively impact the entire upstream and downstream industries, including the worsening management of parts suppliers and a reduction in employment," adding that efforts from both the public and private sectors are needed for diversifying exports through new market exploration.