Abdullah Safia, 35, who runs a used-car export business at the former Songdo Amusement Park in Yeonsu District, Incheon, met with ChosunBiz on the 6th and said more than 20 vehicles currently cannot be loaded for shipment. Safia said, "The units I sent in Dec. last year were scheduled to arrive in Dubai, United Arab Emirates (UAE), in early this month, but they have been waiting in the Strait of Hormuz until now," adding with a sigh, "We are paying an additional $300 per container as an expense."
With the Strait of Hormuz blocked by the U.S.-Israel war against Iran, Korean used-car companies have been cut off from exporting to the Middle East. An adverse cycle has begun in which vehicles they purchased cannot be loaded, inventories are piling up, and prices for export-bound used cars are falling.
Exporters said in unison that the current situation is "adding insult to injury." On top of multiple headwinds—Libya's currency collapse, import controls by the Egyptian government, and the low-price offensive of Chinese used cars in Syria and Jordan—recently strong exports to Dubai have also been blocked.
According to the used-car industry on the 9th, Dubai has emerged as a core export destination since 2023. As assessments grew that the Dubai free zone was safer for transactions than other Middle Eastern countries, used-car sellers from around the world flocked there. Buyers from Middle Eastern countries such as Iran and Saudi Arabia purchase imported used cars in Dubai and re-export them to neighboring countries.
According to the Korea International Trade Association, a total of 65,749 used cars headed from Korea to Dubai last year, ranking fourth among all used-car export destinations. Narrowed to Middle Eastern countries (UAE, Jordan, Saudi Arabia), they accounted for more than 50% of all exported volume (123,241 units). The export amount totaled about 698.1 billion won.
With sea routes blocked to Dubai, a rising export destination, used-car exporters are facing mounting losses. Companies based at the Songdo Amusement Park are particularly hard hit. About 700 companies are clustered there, and roughly 70% export used cars to the Middle East.
Tak Seong-yeol, head of Caravan Trade, said, "Before the Strait of Hormuz was closed, we sold 150 to 200 used cars to the Middle East every month," adding, "Since the start of this month, we are exporting only about one car a day." Tak added, "The values of used cars we purchased before the Iran crisis are also falling, so we have to sell at a loss."
Since the war began, more customers at the Songdo Amusement Park have been from Africa or West Asia than from the Middle East. A buyer from the Middle East noted that, because of the war, demand has risen more for 1-ton trucks than for passenger cars.
Here, many vehicles had contracts concluded and "Sold Out" written on the front windshield but still had not been loaded for shipment. One company said it bought 30 Mercedes-Benz vehicles last month, which are popular in Dubai, but is in trouble because the export route is blocked.
Exporters cancel the vehicle registration in Korea when they purchase a used car. Once cancellation is processed, they must export it within one year. If they do not export, they must pay fines and have no choice but to scrap the purchased vehicle.
Because of this, companies said their worries are growing, as they would have to shoulder major losses if the U.S.-Iran war is prolonged. An official at a used-car export company, who requested anonymity, lamented, "My head hurts because I can't figure out how to handle the vehicles we bought."
Companies said losses have accumulated not only due to the war between Iran and the United States but also because of various setbacks in the Middle East in recent years. Libya, which used to import over 200,000 cars a year, has seen its currency collapse and its import scale shrink. Egypt since 2024 and Syria since last year have each had their governments restrict used-car imports.
Tak said, "In 2021 and 2022 there was the Israel-Palestine conflict, and in 2024 the conflict between the Yemeni government forces and Houthi rebels dampened used-car exports." Safia said, "In Syria and Jordan, cheap Chinese used cars have recently come in, and Korean used cars are not selling."
Prices of auto parts are also falling due to the drop in used-car exports. When exporters bought vehicles on the verge of scrapping, they often purchased parts as well to repair them locally, but with export routes blocked, demand for parts has also declined.
Shin Hyeon-do, head of Used Car Research, said, "Last year, the No. 1 export item for small and midsize enterprises was used cars," adding, "If the central and local governments fail to craft measures to overcome the crisis stemming from international affairs, another 'export cash cow' will disappear."