Boom in Used Car Exports Cushions South Korea from U.S. Tariff Impact

Incheon, South Korea, Sept 30 (Reuters) — From the muddy grounds of a former amusement park on South Korea’s western coast, tens of thousands of used cars are being packed into containers for shipment abroad. The country’s booming second-hand vehicle trade is helping offset the blow from U.S. tariffs on new car sales, traders and officials say.

At makeshift facilities in Incheon, South Korea’s largest hub for used car exports, workers toil around the clock in sweltering heat to secure vehicles bound for overseas markets.

“It is embarrassing for us to say ourselves our business is a star export item,” said Kevin Seol, a trader who exports around 100 vehicles a month. “But the industry keeps growing, so I think we are contributing to the national exports.”

South Korea’s shipments of new cars to the United States have fallen for six consecutive months since President Donald Trump imposed a 25% tariff. Yet global auto exports have risen for three months in a row, driven by record-high sales of used cars. According to trade ministry and customs data, second-hand vehicles now account for roughly a quarter of total car exports by volume and 13% by value.

In August, South Korea recorded its highest-ever monthly car exports, valued at $5.5 billion, a 9% increase year-on-year, the ministry reported. Used car exports surged 35% to $711.5 million in the same month, according to the Korea Used Car Distribution Research Institute.

Rising Global Demand

Analysts say demand for older Hyundai and Kia models remains particularly strong in Russia and the Middle East, with a weaker won further boosting competitiveness.

“Exports to the U.S. don’t account for much of our business,” Seol said. “Demand from other countries is strong, so the tariffs haven’t really hurt us.”

Government data shows most of South Korea’s used cars are exported to the Middle East, Central Asia, and Russia. Traders note that Korean vehicles often have an advantage over Japanese models in these regions, as they are built for right-hand driving, consistent with local road rules.

Tariffs and Prices

In South Korea’s biggest new car export market, the United States, the 25% tariff continues to weigh heavily, higher than the 15% levied on Japanese and European cars. Seoul is currently in negotiations to reduce the rate.

Still, some experts believe the tariff burden on new vehicles could bolster the used car trade. “If U.S. tariffs on new cars rise, car prices will go up globally,” said Shin Hyun-do, director of the Korea Used Car Distribution Research Institute. “In that case, used car prices are likely to follow suit.”

Record Growth

In the first half of 2025, South Korea’s used car exports surged 72% to $3.9 billion, with 437,151 vehicles shipped overseas. That represented nearly one-quarter of the country’s total auto exports by volume, underscoring the growing role of second-hand cars in sustaining South Korea’s automotive industry.