Central Asia emerging as South Korea’s new used car export market

South Korea’s export volume of secondhand vehicles to Central Asia is increasing for an unexpected reason: Russia.

According to the Korea International Trade Association (KITA) on Wednesday, Korea’s monthly used car exports to Kyrgyzstan stood at 4,251 units on average in 2023, a threefold increase from 1,939 vehicles the year prior.

And growth is accelerating this year.

In June, Korea shipped 5,970 used vehicles to Kyrgyzstan – a 16-fold increase from a monthly average of 377 units three years earlier.

Kazakhstan saw a fourfold increase in used vehicle imports from Korea in June with 1,447 units over the same period.

Exports to Tajikistan doubled to 1,455 units in June from three years ago.

VEHICLES CHANNELED INTO RUSSIA

Analysts said used cars from Korea are being funneled into Russia via these Central Asian countries.

These vehicles typically pass through customs clearance in Almaty and Bishkek, the principal cities of Kazakhstan and Kyrgyzstan, respectively, eventually ending up in Russian cities such as Moscow and Saint Petersburg, they said.

Amid international sanctions imposed on Russia following its 2022 invasion of Ukraine, Moscow is importing vehicles through Central Asian countries to avoid US-led economic sanctions.

Russia has been suffering from a chronic automobile shortage since the outbreak of its war with Ukraine.

The situation worsened as foreign carmakers operating in Russia have been forced to leave amid the protracted Russia-Ukraine war.

Earlier this year, South Korea’s Hyundai Motor Co. pulled out of Russia by selling its St. Petersburg plant, Hyundai Motor Manufacturing Rus (HMMR), for just 10,000 rubles ($116) to a Russian company.

RISING RUSSIAN ECONOMY

According to the Financial Times and other media outlets, the Russian economy is enjoying a strong rebound, with its people’s real wages rising thanks to the government’s large-scale spending on the defense industry.

“The average selling price of a used car heading to Kazakhstan and other Central Asian countries is $25,000. This compares with Korea’s average new vehicle sale price of $23,300 in 2023. I can say used cars are selling at higher rates than new cars in Central Asia, ending up in Russia,” said Shin Hyun-do, head of the Korea Used Car Distribution Research Institute.

With strong sales in Central Asia, Korea’s overall used vehicle exports reached 638,723 units last year, up 36% from 467,038 in 2021.

In the first half of this year, secondhand vehicle exports reached 290,963 units.

FALLING SALES IN THE MIDDLE EAST

Korea’s used car exports to the Middle East, its No. 1 export destination for years, are declining.

Libya, Korea’s top secondhand vehicle export market in the region, saw imports from Korea fall to 7,397 units in June, down sharply from a monthly average of 12,622 units in 2023.

Exports to Turkey halved to 2,561 units in June from 5,468 over the same period.

Exports to Egypt and Jordan fell by at least a third.

“Used car importers and exporters had difficulty securing ships to the Middle East due to the attacks by the Houthi rebels in the Red Sea,” said Shin.

Write to Jin-Won Kim at jin1@hankyung.com

In-Soo Nam edited this article.