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Korea's two major motorcycle makers, S&T Motors and Daelim Motor, are doing booming business these days as demand for scooters has spiked in the U.S. and other major markets due to sky-high oil prices. S&T, located in Changwon, South Gyeongsang Province, has developed an advanced 650cc motorcycle targeting developed markets dominated by European and Japanese brands. Daelim, also based in Changwon, is raising production at home based on its solid 50 percent domestic market share.
Scooters are mostly out of stock in the U.S., whether they be Chinese or Korean made. While the low-cost Chinese scooters are 50 percent cheaper than their Korean rivals, many American riders have been disappointed by their poor quality and have turned to Korean brands, seen as less expensive but of similar quality as Japanese models. Now demand is growing for high-performance Korean scooters.
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Young people ride scooters on a coastal road on Jeju Island.
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S&T is having a hard time meeting the surge in overseas orders. Operations at the company's factory have not been smooth because the supply of key parts imported from Japan has not been able to keep up. In 2003 S&T developed a 650cc engine, making it the only Korean manufacturer so far of large-displacement high-performance motorcycles. Globally, only eight or nine companies in Japan, the U.S. and Europe can produce 650cc and bigger motorcycles.
Daelim sold 39,000 scooters in Korea in the first half of this year, up 10 percent from the same period last year, and sales are expected to rise further in the second half. Exports are also expected to rise 20 percent from 22,000 last year to 26,000 this year. The success is thanks to a series of new models designed to appeal to 20-somethings, as well as enhanced sales and maintenance services. The company is hoping to grow its market even more with the release of its Mario 125 commercial scooter this month.
Officials at both companies are bursting with confidence. While China can produce cheaper vehicles, they say outsourcing to China is not the answer and stress that Korea can meet most of the surging demand in advanced markets by improving productivity and using Korean-made key parts. Up until the mid-1990s the two firms used technology from Suzuki and Honda of Japan and posted solid growth since there was little competition. But after the 1997 financial crisis their market share dropped to a third. When import regulations were scrapped they ended up sandwiched between cheaper Chinese competitors and high-end Japanese and European brands. With a focus on cost-cutting and new product development since 2000, the two are now making a comeback in this era of high fuel prices.
(englishnews@chosun.com )
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