Japanese automobiles accounted for 35% of the Korean import car market in 2008, but have lost more than half of their market share over the last five years.
In the mid-2000s, vehicles made in Japan represented the vast majority of the top 10 best-selling foreign cars in Korea. In particular, Lexus ranked top, followed by Honda. However, those good old days are long gone. As of August 2013, Japanese cars made up merely 14.9% of the Korean foreign car market.
The calamitous decline in market share is attributable to Koreans’ strong preference for German auto brands such as BMW and Mercedes-Benz, as well as Japanese car manufacturers’ passive responses to the “diesel car craze.”
In the first half of this year, among Japanese brands, only Toyota Camry was one of the top 10 best-selling foreign cars in Korea. Other Japanese car brands constitute less than 4%, with Toyota at 3.93%, Lexus 2.98%, and Honda at 2.65%.
In contrast, German car brands, including BMW, Mercedes-Benz, and Volkswagen, have a 13.8% to 24.4% market share, and show steady growth in Korea.
Due to deteriorating sales, Japanese car brands are aiming to recover market share through the introduction of new cars and special discount offers in the second half of 2013. They are receiving a lot of attention in the auto industry, since they are using both discount benefits worth millions of won and competitiveness of new models as stepping stones toward the next golden age.
In May-July 2013, Toyota offered a 3 million won (US$2,796) discount on the main Camry and Prius models, thereby achieving its highest ever monthly sales figure. In October, it continues this large-scale sales promotion. Honda also offers a 2 million won discount (US$1,861) to buyers of its Accord 3.5 V6 and a 7 million won (US$6,524) discount to those who buy its Crosstour this month. In July-September, Infiniti gave a 6 million won (US$5,592) discount on its M37. In October, the Infiniti G25 Smart can be purchased interest-free for 36 months with a 1 million won (US$932) price cut.
An industry source said, “The supply for the Lexus ES300h cannot catch up with the demand right now. The item is on back order for more than one month, which is exceptional for Japanese cars,” adding, “Japanese car makers’ offensive of using new models and great bargains has already begun in Korea.”