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SK Group's advance into Korea's auto retailing industry could cause a major shift in a market that is compartmentalized between homemade and imported brands. SK Networks announced on Thursday that it will deal five foreign auto brands -- Mercedes-Benz, BMW, Audi, Lexus and Toyota -- at its new imports-only stores in Seoul and Gyeongi Province.
The full impact of SK's move into the market is yet to be felt. While SK is confident that providing a diversity of imported cars at affordable prices will bring about significant changes in the market, domestic carmakers and import companies are skeptical, questioning just how deep an effect the company will make. But Kang Cheol-gu, director of the Korea Automobile Manufacturers Association, said SK's move will benefit Korean drivers. "It's ultimately good news for consumers as they will enjoy either lower prices or better service driven by the heightened competition among companies," Kang said.
¡ß Targeting mid-level drivers
Laying its hands on "gray-market" unofficial imports, SK Networks is offering the Mercedes-Benz S600 and S550, BMW 750Li, Audi A8 4.2 QL, Lexus LS 460L and Toyota Camry. The Camry is one of the best-selling cars around the world and competes with Hyundai's Grandeur and Sonata in the U.S. and other overseas markets. That means SK Networks is not only targeting the high-end market but also the mid-level which is currently totally dominated by domestic brands. Prices vary by car but SK claims its cars are 10 to 15 percent cheaper than those from other import dealers. As a matter of fact, a Mercedes S550 can be had for around W176 million (US$1=W933) from SK Networks, W30 million cheaper than elsewhere. Furthermore, by managing maintenance through its Speed Mate car repair shops, SK plans to create a profit model that also links its SK EnCar used car dealerships with the company's own maintenance network.
¡ß Imported brands lower their prices
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Models pose with Mercedes-Benz's new C-class sedan.
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Mercedes, BMW, Lexus and other imported brands are apparently feeling the pressure of SK's move. BMW dropped its prices on its best-selling 5-series cars and Mercedes has introduced new C-class models in the W40 million range. In a recent internal meeting, Toyota Korea President Taizo Chigira is said to have questioned SK's thinking in bringing over the Camry, showing obvious discontent as Toyota itself has not introduced its affordable models to Korea.
Some question whether SK will be able to get hold of enough cars to meet demand, while others are concerned about the company's service in the event of major accidents or breakdowns. SK sources most of its cars from big dealers in the U.S. because of the cheap prices there and the weak dollar. "Headquarters in Germany can keep track if SK is bringing in Mercedes models that are meant for the U.S.," said Kim Han-jun, vice president of Mercedes-Benz Korea. "Then headquarters can exercise control, making mass imports difficult (for SK).¡±
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Kia's Mojave full-size SUV.
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Domestic carmakers plan to respond to the challenge by offering models that will surpass the quality of imported cars. Kia on Thursday presented its Mojave full-size SUV to the press, garnering positive reviews that placed the Mojave on par with German and Japanese models in terms of design and performance. Hyundai meanwhile plans to confront imported luxury sedans with its high-end rear-wheel drive Genesis in January.
(englishnews@chosun.com )
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