Korean Cars are Losing Their Popularity in China Due to Low Competitiveness

The Korea Institute for Industrial Economics & Trade said in its report that the recent rapid decline in South Korean automakers’ sales in China can be attributed to their low competitiveness rather than the conflict between South Korea and China that has followed THAAD deployment in the former.

According to the report, the sales dropped 52.7%, 65.1% and 65.1% year on year in March, April and May this year, the three months when the conflict reached its peak, respectively. The rates of decline exceed those of Japanese automakers in China that were shown in September to November 2012, 41.1%, 58% and 37% each, when territorial disputes were ongoing between Japan and China.

In the meantime, Chinese automakers are supplying their products at lower prices than before these days even though the quality of the products is getting better. For instance, the Chery Tiggo 3 released last year with a manual transmission and a 1.6-liter engine is available at 68,900 yuan whereas the Chery A3 that was released in 2012 with the same engine and transmission was available at 75,800 yuan.

On the contrary, the price of Hyundai Motor Company’s model that is in the same market segment with the same transmission and engine rose from 99,800 yuan to 105,800 yuan during the same period. Between 2012 and 2014, the ratio of Chinese cars that reached the highest level of safety in the China-New Car Assessment Program (C-NCAP) rose from 67.6% to 92.5%.