As sales of imported cars are higher in Korea than Japan in July and rapidly growing, Korea’s auto market is quickly being eaten into by global automakers. At the time when imported vehicles have reached an all-time high of 16.6 percent of the domestic market share in the first half of this year, the government has recently come up with a measure to decrease individual consumption taxes in a bid to boost domestic consumption. Accordingly, there is concern that the measure can accelerate the invasion of imported cars into the domestic market.
According to data from the Korea Automobile Importers & Distributors Association (KADIA) and industry sources on Aug. 30, sales of imported cars in Korea fell short of 10,000 units in 2001, and the figure surpassed 100,000 units in 2011. This year, it is expected to exceed 200,000 units for the first time.
This is largely due to the fact that foreign automakers have released 80 new models in the first half alone, launching a series of attacks, and European automakers are having price competitiveness as well due to the weak euro, rapidly raising market share.
In fact, 3,596 units of the BMW 520d and the 4,926 units of the Volkswagen Tiguan SUV with the 2.0 TDI turbo fitted with BlueMotion technology were sold in the first half of this year alone. The BMW figure went up even further, to 5,828 units, when including the BMW 520d Xdrive. In contrast, 2,326 units of the Kia K9 and 2,413 units of the Ssangyong Rexton W SUV were sold, showing much lower sales than that of imported cars.
Sales of imported cars, including the two models, were up 27.1 percent in the first half from the same period last year. About 20,000 units have been sold every month, and a total of 119,832 units were sold for six months. Also, imported vehicles account for 16.6 percent of the domestic market share in the first half of this year, reaching an all-time high.
In July, the first month of the second half, 20,707 units of imported cars were sold, surpassing the figure of 20,607 units in Japan for the first time. That more imported cars were sold in Korea than in Japan is considered a rare case, because Japan has twice the population and three times the economy. Although the market share of imported vehicles in Japan maintains 10 to 11 percent, the figure in Korea is increasing by nearly 2 percentage points every year.
Hyundai-Kia Motors posted a 69.3 percent domestic market share last year, which was the lowest level since Hyundai Motor acquired Kia Motors in 1998. The company is still struggling to reclaim 70 percent this year. Based on stable domestic demand, Hyundai Motor has been trying to expand to markets overseas, but is facing a crisis as the domestic market is shaky. Also, Hyundai-Kia Motors is losing ground in China, the largest market in the world, with local automakers recently increasing their market shares in the country.
In Sept., when new car models will pour into the market due to the effects of the decrease in individual consumption taxes, both domestic and foreign automakers are expected to launch new products and hold large-scale promotional events, becoming fiercely competitive. Volkswagen will lower the price of the 2016 Tiguan and offer discount benefits worth more than 1 million won (US$846) in Sept. BMW will also release the new 3 Series on Sept. 7, while Jaguar and Lexus are to release new models targeting the market as well.