Seeing what Japanese carmakers did to the United States automobile industry during the Eighties, the Europeans have always been wary of the same story repeating itself in their part of the world. However, the remarkable thing for many years is that while Japanese brands have made inroads into the European auto market, they have never been dangerous enough to existentially threaten the likes of France's Peugeot and Renault or Italy's Fiat among others. In the aftermath of the global financial crisis, car sales have indeed fallen--but have hit European and Japanese makes alike
However, as of late Korean cars have quickly gained market share in a way that Europeans once feared the Japanese would. Keenly priced and well-built, Korea Inc. has made a reasonably lucrative living selling cars in a stagnant-to-declining car market. Make no mistake: it is not a happy sales scene in Europe for those selling four-wheeled vehicles for private use. Plant closures all over the continent have occurred or are imminent on the continent as the realization that massive overcapacity finally hits both carmakers and nations hosting their factories alike.
But all is not gloom. I had forgotten to post this earlier, but the French among others are complaining about the particular threat Korean cars pose--especially with a South Korea-EU FTA already in effect. The French petitioned the EU for surveillance to be implemented late last year that could lead to the reimposition of duties by invoking safeguard mechanisms. Euractiv describes the (failed) effort:
The French government said it "regrets" the European Commission's decision to turn down a request by France to monitor South Korea car imports, after a bilateral trade deal entered into force in July 2011. France had in August called on the Commission to require South Korea to give advance notice of planned car exports to the European Union. Since a free trade agreement (FTA) entered force in July 2011 a surge of auto shipments to the EU from South Korea has taken place.
Korean car imports into the EU rose by 41% in the year to the end of June 2012. During the same period, the increase in France was 24%, Eurostat data show. In July, France's biggest carmaker, PSA Peugeot Citroën, announced plans to close a plant near Paris and cut 8,000 jobs. French carmakers are in general losing market share and struggling due to rising competition from, among other producers, Korea's Hyundai and Kia. The surveillance France sought would have meant authorities could have demanded a document to accompany products scheduled for export to the EU.
On Monday, the Commission sent a letter to France explaining that the French request was based on a provision requiring them to show that imports were concentrated in one or several EU member states and this condition had not been met. "While it is true that the car sector in the EU, and in particular in France, is going through a difficult period, this cannot be attributed to the entry into force of the EU-Korea FTA," EU Trade spokesman John Clancy said, cited by the Reuters news agency.Is it simply another application of time-tested French dirigisme? It could be, but the difference now is a clear existential threat to the likes of Citroen-Peugeot and Renault as proud French flag-bearers. While it's tempting to blame the Koreans, I simply think they are selling products more in touch with the times. During times like these, the value proposition is foremost in the minds of buyers, and no amount of "Buy French" campaigns will change matters just as "Buy American" has repeatedly fallen under deaf ears Stateside.
The Koreans have obviously outmanoeuvred any number of European carmakers, but to their credit they have also outdone the Japanese in inking an FTA. Ever so retrograde, European carmakers still fear Japanese cars flooding Europe if a Japan-EU FTA is signed [!] Get real. As the saying goes, the early bird gets the worm--and the Koreans got there well ahead of the queue since the Japanese are merely attempting to catch up after many, many years of relatively humdrum sales in Europe.