Brakes Put on Sales Growth

The BMW fire incident raised Korean consumers’ negative perception toward diesel cars, which are the mainstay of imported automobiles.

It has become unclear whether or not the Korean import car industry will be able to post 250,000 units in annual sales as they wished, as unfavorable factors such as BMW's recall and the tightening of exhaust gas regulations have put the brakes on rapid sales growth.

According to the automobile business community on October 28, sales of import cars from January to September totaled 197,055 units. Monthly sales of imported cars hovered at around 20,000 units this year from January to July. But in August, the sales figure dropped to 19,206 units and fell further to 17,222 units in September. with sales growth slowing down, the market share of imported cars is on the decline, too.

Imported cars accounted for 18.3% of the domestic auto market in January, 18.5% in February, and 18.9% in April, renewing monthly highs every month. However, it dropped to 17.3% in May, to 15.4% in July and 14.9% in August and rebounded to 15.8% in September.

The slowdown in sales of imported cars stemmed mainly from the spread of consumer distrust touched off by BMW’s recall, which began in August. BMW once hogged the import car market in Korea with Mercedes-Benz. It managed to sell 2,383 units in August, down 39.8 percent from the previous month and down 41.9 percent from the same period of last year. September sales of 2,052 units also represented a 13.9% drop from the previous month and a 61.3% plunge year on year.

The BMW incident raised Korean consumers’ negative perception toward diesel cars, which are the mainstay of imported cars, dealing a blow to the overall import car market. In September, the share of diesel cars in the import car market dropped to 26.3%, the lowest in eight years. Their cumulative sales volume of 86,841 units this year is eclipsed by that of gasoline cars (92,677 units). In addition, the import automobile market shrank further due to the application of the Worldwide Harmonized Light Vehicle Test Procedure (WLTP), which is an enhanced exhaust gas regulation standard.

As newly applied certification was delayed after selling off their inventory of certified import cars which they were allowed to sell, import car dealers faced a shortage of cars to sell and their launches of new models have been put off. The delay in certification is expected to continue until the end of this year, making it unclear whether or not the import car industry will be able to post record sales this year.

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