Imported Cars
It has been found that the monthly sales of imported cars in Korea set a new record thanks to such factors as the currency exchange rate and the FTA in spite of the domestic economic recession. Local automakers are paying keen attention to the trend with the sales being expected to continue going up for a while.
The Korea Automobile Importers & Distributors Association (KAIDA) announced on June 7 that a total of 13,411 imported vehicles were newly registered in May to post a 0.7% and 14.5% growth rate from a month and a year earlier, respectively. On a cumulative basis, the figure amounted to 61,695, growing 19.4% year on year. “The rapid increase can be attributed to some brands’ aggressive marketing promotion following the start of the peak season,” said Yoon Dae-seong, senior managing director of the association.
In May this year, imported cars accounted for 12.0% of Korea’s passenger car market and their market share increased 1.9% from a month ago. The record high was set in January, when the percentage reached 12.9%. This year’s cumulative sales of foreign cars, in the meantime, grew 19.4% year on year from 51,661 units to 61,695 units. Meanwhile, Korean automakers sold 119,124 vehicles in Korea last month to post a 1.2% drop when compared to the same period of last year, although they are faring quite well in overseas markets.
Industry insiders are pointing out that the decrease in sales is due to localcarmakers’ reliance upon the tariff wall. Global leading automakers have made strenuous efforts to reduce costs, restructure themselves and develop advanced technologies since the international financial crisis of 2008. As a result, they have succeeded in further refining the quality of their products and supplying them at even lower prices at the same time. For example, Toyota have boosted its production capacity by means of solar power generation and process efficiency enhancement and has come up with a series of new models to recover fast from the nightmare of the Sendai earthquake.
However, the manufacturing capacity of Korean carmakers, which suffered relatively less from the financial turmoil, has declined due to labor-management conflicts, compounding the matter of weaker brand awareness. Besides, the tariff barrier has been abolished to cause their price advantage to disappear.
Furthermore, the risk factors are affecting their overseas sales these days. According to Automotive News, the combined turnover of Hyundai Motor Company and Kia Motors in the US market increased by just 1.6% from a month earlier in May, way lower than the industry average at 8.1%. This was because of undersupply and the lack of new models.
It is Japanese automakers that are taking advantage of the circumstances. They sold 2,588 new cars in Korea last month to increase their market share by three percentage points year on year. In contrast, German companies’ share declined by the same margin to 63.1%. 8,456 vehicles imported by German automakers were newly registered in Korea last month.
BMW’s local sales dropped 10.8% during the same period to 2,663 units, causing the market leader’s share to fall from over 25% to 19%. Mercedes Benz’s figure increased by 6.8% to 1,995 and Volkswagen posted a 33.1% increase to 1,952 units, thanks mainly to the recently launched Polo. Audi recorded a 27.5% increase to 1,632 units as well. They were followed by Toyota, which sold 1,314 vehicles to record a 52.8% increase in sales, Ford (44.1% up to 657 units) and Lexus (6.2% up to 521 units).
The cutthroat competition between the German and Japanese car manufacturers in Korea is likely to go on throughout the second half of this year. Toyota kicked off the local sale of the New Generation RAV4 on June 1 and the New IS models make their debut here on June 26. BMW is planning to start the sale of the 320d Gran Turismo from July.