Changes Afoot in Korea's Booming Import Car Market

      June 10, 2014 13:18

      The foreign car market is growing at a fast pace in Korea, surpassing 15,000 cars sold for the third straight month in May. That brought the total sales of imported cars so far this year to 76,460 cars, up 24 percent from a year ago. At this rate, the total number is expected to reach a record 180,000 by the end of this year.

      Competition between brands is growing fiercer. Four German carmakers -- BMW, Mercedes-Benz, Volkswagen and Audi -- have firmly established themselves as market leaders, but BMW was toppled from its long-held top spot for the second month running.

      ◆ New Market Leader

      Volkswagen's Tiguan 2.0 TDI BlueMotion SUV and Passat 2.0 TDI midsize sedan swept the top two spots in terms of sales volume last month. They are affordable and fuel-efficient rather than flamboyant, appealing to more practical customers in the growing market.

      The Tiguan costs W38.6-48.6 million and the Passat W41.4 million (US$1=W1,016), and they boast a thrifty fuel efficiency of 14-15 km/l. Amid the soaring popularity of recreational vehicles here, sales of the Tiguan continue to grow.

      The BMW 520d was the best-selling foreign car here for a long time, but in May, with meager sales of 315 units, its ranking slipped for the second straight month. In April, it was outpaced by the Benz E220 CDI and its ranking has now plummeted to eighth place.

      BMW claims the reason is that with the release of the 520d xDrive four-wheel drive late last year, customers had more options to choose from, leading to the decrease in sales of a single version. It said the xDrive sold over 280 units last month, so if the figure is included, versions of the model still ranked second.

      ◆ Challenges

      BMW continues to lead with total sales of 16,910 cars here so far this year. But industry insiders feel its dominance is being challenged as Mercedes-Benz and Volkswagen are close on its heel with 13,735 and 12,358 units.

      In terms of sales volume by brand from January to May, Volkswagen grew 34 percent on-year and Mercedes-Benz and Audi 40 percent, while BMW posted only 20 percent growth.

      One of the reasons behind BMW's success is its diversified line-up, and rivals are successfully following suit. Benz began selling the new C-Class here on Monday, only five months after the world premiere at the Detroit Motor Show. Volkswagen is introducing various versions of its flagship Golf -- it is taking pre-orders for the gasoline-powered Golf TSI and has launched higher-capacity versions of the Golf GTI and GTD at the Busan Motor Show, which ended last week.

      Nissan plans to introduce diesel models of the Infiniti here to appeal to Korean drivers, while Toyota will diversify its Lexus line-up with hybrid cars. Meanwhile, Ford recently launched the compact crossover version of the Lincoln here.

      Another factor changing the dynamics of the foreign car market is that an increasing number of customers are looking to non-German premium brands like the Jaguar, Land Rover and Volvo as German cars lose their rarity appeal.

      The Korea Automobile Importers and Distributors Association said introducing models that are suitable for Korean consumers at the right time with effective marketing plans is becoming the key to success.

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