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German, Japanese carmakers cash in on Korea-U.S. trade deal: data

By Hyunjoo Jin

SEOUL (Reuters) - Japanese and German automakers are benefiting more than their U.S. peers from a free trade deal between Washington and Seoul, according to import figures suggesting U.S. brands are not reaping the rewards they may have expected from the pact.

U.S. automakers are battling a perception that they lag German peers in fuel efficiency just when sales figures show South Korean consumers are developing a particular taste for diesel-powered models, the German brands' mainstay.

German and Japanese carmakers boosted sales of U.S.-made vehicles last year by nearly five-fold from 2011, the year before the trade deal took effect, outpacing the 43 percent jump U.S. automakers reported during the same period, according to the Korea Automobile Importers and Distributors Association (KAIDA).

South Korea, one of the few auto markets dominated by domestic carmakers, has emerged as a big source of growth for global brands following trade deals with Europe and the United States which cut import tariffs and ignited a sales bonanza.

The South Korean market for imported cars exploded to 9.2 trillion won ($8.87 billion) last year, from just 1.5 trillion won in 2008, according to industry estimates. There were no total revenue figures for imported cars available for 2011.

"The FTA did give us an opportunity to grow but it is not having a significant boost to our sales," an official at Cadillac said on condition of anonymity because of the sensitivity of the issue.

"Growth of foreign car sales in South Korea is mainly driven by expanding sales of diesel models, but there's a dearth of diesel cars in the United States."

Despite the trade deal, U.S. automakers saw their share of South Korea's imported car market shrink to 7.5 percent last year, from 7.9 percent in 2011, according to KAIDA.

German brands led the pack with 67.5 percent of imported car sales last year, while Japanese companies were second on 14 percent.

"U.S. cars are still perceived as bulky and less fuel-efficient than German and Japanese cars," Daelim University College automotive engineering Professor Kim Pil-soo said.

German brands such as Volkswagen , BMW and Mercedes have raised sales of U.S. imports by more than three-fold since 2011, according to the KAIDA data provided to Reuters.

Volkswagen, which did not bring a single car from the United States to South Korea in 2011, sold almost 5,000 U.S.-made vehicles in the country last year.

Unperturbed by the lack of a free trade pact between Tokyo and Seoul, Japanese firms have seized advantage of the Korea-U.S. deal to minimize the impact of a volatile yen and capitalise on lower tariffs on U.S. imports.

The FTA immediately halved South Korea's tariff on U.S. auto imports to 4 percent.

Toyota Motor Corp <7203.T>, Honda Motor Co Ltd <7267.T> and Nissan Motor Co Ltd <7201.T> boosted sales of their U.S.-made cars by seven-fold to 12,193 vehicles last year from 2011, the KAIDA data showed.

That compared with 8,671 U.S.-produced vehicles sold by U.S. automakers, led by Ford Motor Co and Chrysler, a unit of Fiat Chrysler Automobiles .

The surge in U.S.-made Japanese imports has sparked scrutiny from South Korea's customs office.

Customs officials said they were reviewing whether U.S.-made Toyota cars were qualified to get a tariff benefit, which requires vehicles to contain at least 35 percent U.S.-origin materials.

(Editing by Miyoung Kim and Stephen Coates)

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