Korea's auto market is witnessing a surge in lower-cost imported cars. The most popular of these cars feature 2000-3000 cc engines and are priced around W30 million (US$1=W1,273).
Volkswagen sold 933 units of its W30-million Golf in the first half of this year even in the face of the recession, emptying the inventory from the company's warehouse. The model appeals to young Koreans with its characteristic design, said Volkswagen's Kim Min-joo.
BMW's 120d, which sells for W39.9 million, has been selling better than expected since its launch in March. The 120d runs on diesel and boasts a thrifty 16 km/l fuel efficiency. A total of 152 units were sold from March to June.
With a gradual increase in the number of customers in their 20s and 30s, the car industry expects that the market for under-W40 million foreign vehicles will grow significantly in a few years.
But most imported cars are still out of reach for average earners. While 101 under-W30 million foreign cars were sold in Korea in April, the number of over-W100 million foreign cars sold in the same month stood at a whopping 652. Models in the W50-70 million range make up 32 percent of the imported car market, indicating a high preference for high-priced models.
The sales figures suggest that Koreans still view foreign cars as status symbols. In addition, as the W30 million-and-under imports are mostly small or mid-sized and compete with Korean vehicles, they are unable to secure comparative advantages over their Korean counterparts.
"Imported cars are becoming more affordable," said Kim Sung-chul, a researcher at used car website Cars. "But expensive cars still take up a larger share of the market. Buyers of imported cars are mostly in their 40s or over with high social standing."