South Korea Unveils 3 Trillion Won Support Package for Automotive Industry Amid U.S. Tariffs

South Korea has unveiled a comprehensive support package worth 3 trillion Korean won (approximately 20 billion USD) to bolster its automotive industry against the impact of recent U.S. tariffs. The package, announced on April 9, includes a 15% increase in low-cost financing for the sector, raising the total available financing through state-owned banks and financial institutions to 15 trillion Korean won. This financing is aimed at supporting automotive component manufacturers in issuing bonds and securing loans, thereby mitigating the financial strain caused by the 25% tariffs imposed by the United States on imported vehicles and auto parts.

The support package includes a significant allocation of 1 trillion Korean won to a special financing program. This program is a collaborative effort between Hyundai Motor Group, its subsidiary Kia Motors, financial institutions, and the Credit Guarantee Fund. The primary goal of this initiative is to provide financial assistance to automotive component manufacturers, helping them navigate the challenges posed by the new tariffs and ensuring their continued operations.

In addition to financial support, the South Korean government has extended its electric vehicle (EV) purchase subsidy program until the end of the year. This extension is part of a broader strategy to stimulate market demand and promote the adoption of electric vehicles. By offering tax incentives and extending subsidies, the government aims to foster innovation and growth in the EV sector, which is crucial for the industry's long-term competitiveness.

The government has also designated autonomous driving technology as a national strategic technology. This designation comes with tax incentives designed to encourage its development and implementation. By prioritizing autonomous driving technology, South Korea seeks to position itself at the forefront of automotive innovation, ensuring that its industry remains competitive in the global market.

The proactive measures taken by the South Korean government underscore its commitment to supporting the automotive industry during this period of uncertainty. By providing financial assistance and promoting technological advancements, the government aims to ensure the industry's resilience and competitiveness in the face of external challenges. The support package is expected to help automotive manufacturers and component suppliers manage their financial obligations and continue their operations smoothly, thereby safeguarding the industry's future.