The two leaders will tour GM's small-car assembly plant near Detroit and tout expanded auto trade between the two countries under a sweeping new pact.
Congress approved the deal -- negotiated by President George W. Bush in 2007 and revised under Obama at the urging of Ford Motor Co. and the UAW -- on Wednesday.
If Americans can drive Kias and Hyundais in record numbers, Obama insists that South Koreans ought to be driving more Jeeps, Buicks and Fords.
Under the pact, the United States will keep a 2.5 percent tariff on Korea-built cars until the fifth year. In return, Korea will cut its tariff on U.S. auto imports from 8 percent to 4 percent and eliminate the tariff in the fifth year.
South Korea also will immediately reduce its tariffs on electric cars from 8 percent to 4 percent, and both countries will phase out EV tariffs by the fifth year.
The U.S. International Trade Commission said in April that it expected the deal to boost South Korean exports to the United States far more than any increase in U.S. exports there.
Ford is optimistic
Ford, which passionately supports the terms of the final pact, is more optimistic.
"The U.S.-Korea Free Trade Agreement will open new opportunities for Ford to reach even more Korean customers by selling them more American-made Focuses, Tauruses, Mustangs, Escapes and Explorers, among other cars and trucks," Ford CEO Alan Mulally said in a statement.
GM, through the American Automotive Policy Council, also backs the deal. The Detroit News says GM exports three Cadillac models and the Chevrolet Camaro to Korea and has plans to start Corvette shipments by year end.
The UAW supports the deal, too, not only because it lowers tariffs but also because of Korea's vibrant trade union movement, especially in the auto industry.
"We believe the revised (free trade agreement) will improve our economic relationship with South Korea and provide UAW members with the opportunity to make products for export to Asia," UAW President Bob King said in a statement.
U.S. automakers shipped fewer than 7,500 vehicles to Korea last year -- less than 1 percent of the market's 1.5 million sales. Overall, imports represent 7 percent of the mature Korean market -- the world's 12th-biggest, J.D. Power and Associates says.
Like it or not, Koreans mostly prefer Korean-made cars.
Global grudge match
But what's really at play in the details is a little global grudge match between Detroit's two biggest automakers and their biggest brands.
When Daewoo Motor Corp. went belly-up after a disastrous global expansion in the late 1990s, General Motors swept in to buy the bankrupt assets. Ford, playing mostly a spoiler role but also eager to grab a source of low-cost manufacturing in an important market on the cheap, also submitted a bid.
GM prevailed in 2001, in large part because it knew Daewoo like the back of its hand ever since it helped launch the company in the 1970s.
Ford has been quietly seething ever since. GM Daewoo Korea has become a little juggernaut while Detroit's No. 2 automaker has been essentially blocked out of a market in booming Asia.
The Ford brand, with worldwide sales of 5.1 million, topped Chevrolet globally by about 900,000 units last year, according to J.D. Power and Associates.
South Korea is no China or Russia or Brazil in terms of auto sales, but it's a source of low-cost engineering and manufacturing.
Following its prized acquisition, GM did the politically correct thing and kept the Daewoo brand around, especially in Korea.
GM No. 3 in Korea
GM is now Korea's third-largest automaker behind Hyundai and Kia.
Korea has become one of GM's biggest manufacturing, design and technology hubs -- especially for small cars. It will be the first market to launch the new Malibu on Nov. 1.
GM Korea's combined domestic sales and exports reached 1.84 million vehicles last year, mostly under the Chevrolet brand.
Ford has sold fewer than 3,000 cars annually in South Korea in recent years. The company cited as reasons nontariff barriers and other unfair rules that earlier versions of the trade deal failed to address.
Earlier this year, GM announced it would phase out the Daewoo brand in favor of Chevrolet.
The move has meant 900,000 to 1 million units of incremental sales -- mostly in Korea, Vietnam and eastern Europe -- for Chevrolet.
In fact, GM Korea now produces one out of every four Chevrolets sold worldwide.
And they now appear closer than ever in Ford's review mirror.
