Dealers of imported cars are seeing the biggest growth in operating profits. As the domestic imported car market is rapidly expanding, large conglomerates, such as Kolon, Hyosung and KCC, are entering the market. Although the competition becomes more intense, their profits are increasing as well.
According to imported car industry sources on Apr. 5, sales of KCC Automobile Corp., which sells Jaguar Land Rover, grew as much as 70 percent year-on-year last year, surpassing the 200 billion won (US$172.41 million) mark for the first time.
KCC Auto Corp., an official dealer of Mercedes-Benz, recorded 250 billion won (US$215.52 million) in sales and 10 billion won (US$8.62 million) in operating profits last year. Its holding company KCC Holdings owns KCC Motors (Honda), Autostadt (Porsche), Premier Automobile (Nissan) and Premier Auto (Infiniti) as well as KCC Auto and KCC Automobile. Their combined sales last year reached 600 billion won (US$517.24 million). As 240,000 imported cars were sold in the domestic market last year, all dealers owned by KCC Group posted sales growth of up to 200 percent.
Kolon Global Corp., an official dealer of BMW, had a turnover of 940 billion won (US$810.34 million) last year. The company is about to reach sales of 1 trillion won (US$862.07 million). Sales of the vehicle sales division at Kolon Global is rapidly growing every year from 771.9 billion won (US$665.43 million) in 2013 to 865.7 billion won (US$746.29 million) in 2014. The group also turned its company which produces and sells OLED related products into Kolon Auto and has become an official dealer of Audi from last Sept.
Sunin Motor Co., an official dealer of Ford and Lincoln owned by Kukdong Oil & Chemicals Co., and Gojin Motors Co., the biggest dealer of Audi, also shows a remarkable sales growth. Gojin Motors recorded 516.4 billion won (US$445.17 million) in sales last year, while its operating profits increased by 60 percent from a year earlier. Sunin Motor also recorded 277 billion won (US$238.79 million) in sales and 4.2 billion won (US$3.62 million) in operating profits last year, showing a big growth from the previous year.
Hyosung Group took over a 100 percent stake in Forza Motors Korea Corp. (FMK), the exclusive Ferrari and Maserati dealer in Korea, last year, expanding its imported car portfolio. Sales of FMK, which sells super cars with a price tag of around 100 million won (US$86,207), amounted to 184 billion won (US$158.62 million) last year, up 80 billion won (US$68.97 million) from a year ago. Hyosung also owns The Class Hyosung Co. (Mercedes-Benz), Hyosung Toyota Corp. (Toyota) and The Premium Hyosung Co. (Lexus).
In addition to dealers owned by large conglomerates, most imported car dealers saw a rapid growth last year. Hanbul Motors Corp., which sells Peugeot and Citroen with the concept of imported cars priced at some 20 million won (US$17,241), exceeded sales of 200 billion won (US$172.41 million) last year for the first time. Its operating profits soared by a whopping 150 percent, compared to the same period a year ago. This is largely due to the large increase in sales of the Peugeot 2008 sports utility vehicle. Moreover, the operating profits of Handok Motors Co. and Deutsch Motors Inc., which sell BMW, rose by 130 and 120 percent, respectively.
Han Sung Motor Co., Mercedes-Benz's largest official dealer in Korea, surpassed sales of 1 trillion won (US$862.07 million) in 2014 for the first time in the domestic imported car industry. The company hasn’t revealed the performance last year yet, but market watchers think that it saw the big growth in sales from a year earlier. Mercedes-Benz released 16 new models in the domestic market last year, accomplishing the highest sales ever.
However, there is a company which showed a deficit. Autoplatz Inc., an official dealer of Volkswagen which caused controversy due to the diesel emissions scandal, posted 2 million won (US$172.414) in operating losses last year despite sales of 176 billion won (US$151.72 million). Kim Pil-soo, an automotive engineering professor at Daelim University, said, “Since the company had excessive promotional events in a bid to boost sales, it caused the loss in the imported car market which showed an all-time high growth. To put it the other way round, there are bubbles in the price of imported cars sold by other dealers that made profits.”
The industry sources point out that the government should stop large conglomerates from expanding businesses indiscriminately and dealers’ profits should be returned to consumers by normalizing the price of imported cars.