South Korea promises $2 billion to the tariff-hit Auto sector
9th April 2025, the economic fallout of the automotive industry in South Korea due to the tensions in global trade and tariffs has triggered a strategic move to safeguard it. An announcement of a $2 billion aid package to counter the downfall. The announcement was made amid the manufacturers’ distress over increasing pressure from policies, especially in crucial export markets like the United States and the European Union.
This aid package was put forth by the Ministry of Trade, Industry and Energy, South Korea. The plan is to gradually spread it over a span of 5 years and include loans with a low interest rate, breaks from tax, and subsidies to carry research and development. Along with these, a significant amount of the funds would be directed toward boosting innovation in the electric vehicles market. The government of South Korea has also pledged to reduce the export volumes to support all the small and mid-sized suppliers hit hard by it.
The automotive sector of the country contributes around 13% to the country’s exports and provides an opportunity for employment to thousands of people. It also includes some of the global automotive giants like Hyundai and Kia. Analysts beleive that with the resilience shown by South Korean automakers and the financial cushion offered by the government, will help in mitigating risks and will also encourage greater investment.
According to Coherent Market Insights, the automotive interior materials market is evaluated at USD 63.28 billion in 2025. And it is anticipated to reach USD 83.27 billion by 2032. The market is expected to grow with an increasing Compound Annual Growth Rate (CAGR) of 4% from 2025 to 2032. The increase in demand for premium cars, the increasing need to transport people, raw materials and other substances, technological advancements, are some driving factors that contribute significantly to the market’s growth.
Asia Pacific is a lucrative market in the automotive sector. With major players in the automobile industry coming from China, South Korea, India and Japan, Asia Pacific leads and dominates the market.
“The global automotive interior material market is highly competitive and consolidated with large players making an appearance in the market. However, Asia Pacific dominated in 2025 and is expected to retain its dominance over the forecast period”, says a senior analyst at Coherent Market Insights.
The aid package announced by South Korea is anticipated to roll out in phases, and is said to be followed by strategic investments in green technology.
Source:
News outlet: Reuters
