A New Road Opens for Korean Cars: Korea–UK FTA Deal Sparks Fresh Hopes for Export Growth

South Korea’s automotive industry has welcomed the conclusion of the improved Korea–UK Free Trade Agreement (FTA), viewing it as a major turning point that could significantly expand access to the British market and strengthen export competitiveness, particularly for future mobility vehicles such as electric cars. Industry groups say the agreement, finalized in December, comes at a critical time as global trade conditions become more uncertain and competition intensifies in key overseas markets.

The Korea Automobile & Mobility Association (KAMA) stated on January 13 that negotiations on the revised Korea–UK FTA were successfully concluded on December 15, 2025, and that the Ministry of Trade, Industry and Energy held a briefing session on January 8 to help companies better utilize the agreement in practice. According to KAMA, the revised deal is expected to boost the competitiveness of Korean automobile exports by easing key trade requirements and making it easier for domestic manufacturers to expand their presence in the UK market.

Automobiles account for approximately 38% of South Korea’s exports to the UK as of 2024, making them one of the most important beneficiary sectors under the agreement. Previously, Korean vehicles needed to meet a regional value content requirement of at least 55% to qualify for tariff-free treatment. Under the newly agreed terms, that threshold has been significantly lowered to 25%, greatly improving the conditions for Korean companies to take advantage of FTA benefits. This change is particularly meaningful for electric vehicles, where supply instability and price volatility of key battery minerals such as lithium and graphite have posed ongoing challenges. The relaxed value-added requirement is expected to allow exporters to enjoy tariff benefits more consistently, regardless of fluctuations in raw material sourcing.

The agreement also aligns with broader developments in the Korean auto industry’s transition toward sustainability. Hyundai Motor Group recently received official approval from the Science Based Targets initiative (SBTi) for its greenhouse gas reduction targets aimed at achieving carbon neutrality by 2045. This certification fulfills one of the core requirements tied to the UK government’s electric vehicle subsidy policies. SBTi is a globally recognized standard-setting body that verifies whether corporate emissions reduction targets are grounded in scientific evidence, and its approval strengthens the position of Korean automakers in environmentally focused markets like the UK.

Industry representatives see the UK, along with the wider European market, as an increasingly important alternative destination for Korean automobile exports, especially amid growing uncertainty surrounding exports to the United States. A KAMA official noted that Europe is emerging as a key substitute market that could help offset potential declines elsewhere and emphasized the importance of swiftly completing remaining domestic procedures, including parliamentary ratification, to ensure the agreement enters into force without delay.

As global demand shifts toward electric and low-emission vehicles, the revised Korea–UK FTA is being closely watched as a framework that could reshape trade flows and reinforce South Korea’s position in the future mobility sector. While the agreement still awaits final implementation, the automotive industry views it as a timely opportunity to accelerate exports, diversify markets, and secure a stronger foothold in one of Europe’s most important automotive markets.