(By Observer.com, Zhang Jiadong; Editor: Gao Xin)
According to Reuters on September 30, South Korea is using its thriving used car export business to offset the impact of U.S. tariffs on new car exports.
A South Korean used car trader said, "We are not proud to say our business is a star export product, but the number of this industry is continuously growing, so I think we are contributing to the country's exports."
Used car export complex in Incheon, South Korea - Reuters
In April this year, Trump officially announced a 25% tariff on imported cars, which was seen as the beginning of global trade friction and caused severe damage to the global automotive industry, especially for countries such as the UK, Germany, South Korea, and Japan, which had close ties with U.S. exports. These countries have successively negotiated with the United States and reached a series of tax reduction agreements.
However, even though these countries that trade cars with the U.S. have reached tax reduction agreements with the U.S., their car exports are still suffering serious setbacks due to policy uncertainty.
Take South Korea as an example, although in July this year, South Korea and the U.S. reached an agreement to reduce the car tariff to 15%, the subsequent negotiations on the way of investment to the U.S. have stalled, and currently, the tariff rate on South Korean cars remains at 25%. This has led to a continuous six-month decline in South Korea's car shipments to the U.S.
However, according to data from the South Korean Ministry of Trade and Customs, supported by record high used car sales, South Korea's global car exports have increased for three consecutive months. The Ministry of Industry, Trade and Energy stated that South Korea's car exports in August reached $5.5 billion, an increase of 9% compared to the same period last year, setting a record high for monthly exports. Data from the Korea Used Car Circulation Institute showed that used car exports in August surged by 35%, reaching $710 million.
Top countries for South Korean used car exports - Reuters
Currently, used car sales account for a quarter of South Korea's total car exports, and the export value accounts for 13%. According to data from the South Korean government, most of the used cars exported from South Korea are sold to the Middle East, Central Asia, and Russia. Shin Hyun-dae, director of the Korea Used Car Circulation Institute, said that in January-June this year, the number of used cars exported to the Middle East exceeded that of new cars, and the average monthly sales of used cars to Russia increased by 40%.
Some South Korean traders said that in these markets, due to the compatibility of left-hand drive, South Korean cars are more competitive than Japanese cars.
Shin Hyun-dae also said that although the U.S. tariff is unfavorable for the new car market, it may further increase the demand for used cars and raise prices. This has helped the South Korean automotive industry avoid uncontrollable declines despite the drop in new car trade with the U.S.
Used car export complex in South Korea - Reuters
However, the South Korean industry also pointed out problems that limit its further expansion of export scale, such as weak infrastructure at the export center may restrict the growth of overseas sales. "Private companies rent these muddy areas here and park cars there," said Park Young-hwa, head of the Korean Used Car Export Association. "The road conditions are very bad in summer, and buyers' feet get stuck in the mud, making it hard to view the cars."
Additionally, South Korea has increased some export restrictions in 2024, which also affects some used cars with engine displacements over 2 liters.
But even with many challenges, according to South Korean media reports, the volume and value of South Korean used car exports are expected to set new records this year.
South Korean Democratic Party member Heo Jong-sik proposed a bill in April this year aimed at establishing a registration system for used car exporters and developing specialized export zones. He said, "Since used car exports have become one of the main export products, the government should manage and cultivate the industry through policy intervention."
Similarly, Japan is also strengthening its used car export business. Currently, Japan and other countries have secured certain tariff benefits (the car tariff has been reduced to 15%), but the huge trade volume with the U.S. still causes significant economic losses for Japan.
Honda cars parked at Yokohama Port - Getty Images
According to trade statistics published by the Japanese Ministry of Finance, due to the U.S. tariff policy, Japan's car exports to the U.S. in August fell sharply by 28.4% year-on-year, dragging down the overall U.S. exports from Japan by 13.8%. Since April this year, Japan's exports to the U.S. have decreased for five consecutive months.
Similar to South Korea's approach of supporting the industrial economy through used car exports, in addition to major Japanese manufacturers like Toyota being forced to increase production capacity in the U.S. and shift to local procurement of parts, Japan is also increasing its used car exports.
Used car exports in Japan in the first half of 2025 - China Auto Circulation Association
According to statistics, used car exports in Japan in the first half of 2025 reached 820,000 units, breaking through the 800,000 mark for the first time since 2002.
Industry experts said that in the first half of last year, due to the issue of false vehicle certification, new car sales in Japan dropped significantly, reducing the number of used cars recovered, leading to a decrease in overall circulation volume.
This year, Japanese vehicles have gradually emerged from the shadow of the fraud scandal, and new car sales have recovered, driving up the circulation volume of used cars and directly boosting the export scale. At the same time, this year, due to U.S. tariffs causing a downturn in the retail export market for Japanese automakers, used car exports have become a stronger channel for offloading (eliminating traditional intermediaries in commercial activities and directly delivering products or services from producers to consumers).
However, the more mature Japanese used car export market also has its own limiting factors. In 2023, to avoid the risk of sanctions due to geopolitical conflicts, the Japanese government cut off the sale of used Toyota, Honda, and Nissan cars in the Russian market, which once caused a decline in the performance of the Japanese used car export business.
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