Korean Car Market
The monopolistic position of Hyundai Motor Company and Kia Motors in the local market is crumbling, whereas imported cars are increasing their presence at a very rapid pace.
The two companies’ combined local market share dipped below 60% last month for the first time in five years, due mainly to not only the labor union strike, but also aggressive marketing by the other three Korean automakers and foreign carmakers.
Most imported car buyers are waiting for their cars for at least a couple of months these days, as the orders have been piled up. Under the circumstances, industry experts are saying that non-Korean automakers’ growth will pick up even more speed if the supply shortage is dealt with properly in the local market.
Their rapid growth here can be attributed to their aggressive pricing policy and product diversification. Many of them have cut the prices of their products by one to three million won since late last year, after the implementation of the Korea-EU FTA. Though the amount of discount has been rather small, the effect has been massive, which means a lot of local customers are looking forward to buying imported cars. German automakers like BMW, Mercedes Benz and Volkswagen, excluding Audi, have set new sales records this year, selling more than 10,000 vehicles in total in the first half alone. Toyota, which faltered last year, has sold over 7,000 cars during the same period, too. Even imported compact cars are increasing their popularity nowadays.
It is only SUVs that have survived the aggressive marketing campaigns. Ssangyong Motors, whose lineup is made up of SUVs with the only exception of the Chairman, has grown 34.1% this year. According to the Korea Automobile Manufacturers Association, the domestic sales volume of the five Korean automakers declined 2.7% year on year to 672,813 units in the first half of 2013.
“The increasing number of imported vehicles in the Korean market should be interpreted as Korean makers losing their ground, not the size of the market is growing,” said automotive engineering professor Kim Pil-soo at Daelim University, adding, “It seems that Hyundai and Kia will be able to get ahead of their rivals again if they apply their jaw-dropping warranty services for US customers to the Korean market.”