Shut out of Middle East, Korea's used car exporters look to Mongolia
Used-car exports totaled $4.28 billion from January through August, putting this year's monthly average about 28 percent below last year's, with the Middle East conflict largely to blame.
A used Korean car bearing a "Seoul Taxi" sign on a road in Ulaanbaatar, MongoliaKO SUK-HYUN
ULAANBAATAR, Mongolia — In the heart of Ulaanbaatar, Mongolia’s capital, one word stands out in the gridlock: “Seoul,” painted on used taxis shipped from Korea.
The owners of these cars, which mostly ferry passengers between the airport and downtown, have kept the label to advertise that the vehicles are Korean-made.
With the war in the Middle East halting shipments to what had been their biggest market for more than six months, Korea’s used-car dealers are turning to Mongolia and Central Asia.
Used-car exports totaled $4.28 billion from January through August, according to the Korea International Trade Association. That puts this year’s monthly average about 28 percent below last year’s, when exports reached a record $8.86 billion.
The Middle East conflict is largely to blame: Cargo space to the region is scarce, and soaring shipping costs have erased the thin margins on vehicles that each typically sell for a few thousand dollars in profit.
About 1.7 million new vehicles were registered in Korea last year, while some 2.27 million used cars changed hands, according to the Ministry of Land, Infrastructure and Transport. This means 1.3 used cars were sold for every new registration — a figure that trails the United States’ 2.4 and Germany’s 2.3.
Japanese cars are parked in a parking lot in Ulaanbaatar, Mongolia. Japanese models make up more than 90 percent of Mongolia's imported passenger cars.KO SUK-HYUN
The industry is courting new buyers to seek growth abroad. The Korea Trade-Investment Promotion Agency recently brought in buyers from Uzbekistan, Mongolia, Africa and the Commonwealth of Independent States to meet Korean dealers and parts suppliers.
Mongolia is seen as the most promising customer. Though Japanese models account for more than 90 percent of the country’s imported passenger cars, its right-hand-drive vehicles still inconvenience Mongolians who drive on the left, just like Korea.
Diplomacy may help, as Korea and Mongolia reached an agreement in principle regarding a comprehensive economic partnership agreement during President Lee Jae Myung’s state visit to Mongolia in July.
Once the agreement is signed and takes effect, tariffs on Korean used cars four to six years old will be phased out over five years.
“Korean used cars once sold abroad for only half the price of comparable Japanese models,” said Kim Pil-soo, a professor of automotive engineering at Daelim University and chairman of the Korea Used Car Export Association. “Now they fetch 70 to 80 percent.”
Japan still holds the edge, Kim said, because buyers trust its certification, inspection and warranty systems, as well as the durability of its cars.
“Korea must build a certification system for exported vehicles so they command fair prices, such as by offering exporters one-stop support, publishing clear information on each country’s regulations and easing rules so that flood-damaged cars can be shipped to countries that want them,” he added.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
