Sales of luxury cars are surging in Korea even though the economy has yet to emerge dully from the doldrums it entered after the 2008 global financial crisis.
Overall sales of imported cars rose 24 percent on-year during the first five months of this year, but luxury cars priced at W70 million or more saw an increase three times more than that with 79 percent over the same period. (US$1=W1,021).
◆ Booming Sales
According to the Korea Automobile Importers and Distributors Association, a total of 19,429 luxury cars were sold from January to May, accounting for 25 percent of total imported car sales.
Some 5,930 cars cost more than W100 million, up 30 percent on-year.
Volkswagen's luxury Bentley brand is leading sales in this exclusive segment, with sales jumping almost three-fold to 141 units. And the best-selling Bentley is the Flying Spur, which costs a cool W287 million.
Jaguar Land Rover sales have also risen 24 percent to 852. Cho Joo-hyun, the British carmaker's marketing executive in Korea, said, "Korea has become an essential market from the perspective of our headquarters, since it ranks at No. 4 in the world in terms of sales of our top-of-the-line XJ model."
The main reason for the boom is growing demand for showy cars that stand out as more people buy imported cars. Importers are trying to differentiate themselves by bringing faster and more eye-catching models into showrooms here.
Yoon Dae-sung at KAIDA said, "Consumers who used to drive a Mercedes or BMW are switching to relatively rarer models like Bentleys and Jaguars. And decreasing animosity among Koreans toward imported cars is prompting wealthy customers to open their wallets."
The rising popularity of luxury SUVs, which are more expensive than sedans, is also behind the growth trend.
A case in point is the Range Rover, which is the favored vehicle of rich moms in the affluent Gangnam district of Seoul. SUVs are attracting a growing number of female customers as word spread that the higher driver's seat makes driving easier.
There is a two-month waiting list for a Range Rover Sport that costs between W117 million and W140 million.
Porsche recently began marketing its small SUV Macan here in order to tap into this burgeoning market.
◆ Rising Competition
Competition in the ultra high-end segment is expected to intensify in the second half of this year. Maserati unveiled at the recent Busan Auto Show its new Ghibli diesel, which costs W90 million. This is the first time the Italian luxury carmaker has sold a model that cost less than W100 million in Korea, in a bid to increase sales.
Bentley plans to launch a downsized version of the Flying Spur, while Mercedes Benz is beefing up its lineup in the luxury sedan segment by introducing the new S Class Coupe later this year in Korea.
BMW, which is the top-selling importer, is also trying to set itself apart from its rivals by selling the M3 and M4 coupes here.
This unforgiving onslaught by imported carmakers has sent alarm bells ringing at Hyundai and affiliate Kia. Hyundai has seen sales of its large Equus sedan plunge around 27 percent and is trying to stage a showdown with its new Genesis sedan as well as a new premium sedan being rolled out in October.