Why Does Toyota Fare so Poorly in Korea?

      October 11, 2013 12:02

      It has been four years since Toyota advanced into Korea in October 2009 with just four models -- the Camry, Camry Hybrid, Rav4, and Prius. But as of September this year, the Japanese giant had only a 5.2 percent in the imported car market here and a mere 0.6 percent in the entire passenger car market.

      Back in 2009, Toyota set the price of a full-option Camry at W34.90 million (US$1=W1,074), just in between a full-option Hyundai Sonata and Grandeur. At the time, many predicted a "Toyota shock," worrying that the world’s biggest carmaker could take a huge bite out of the market here.

      But that rather spectacularly failed to happen.

      Instead, the foreign car brands that threaten the Sonata and Grandeur are Germany's BMW, Mercedes-Benz, and Volkswagen.

      Toyota Korea has been gearing up to introduce a wider range of cars here, from the semi-medium Corolla and the luxury sedan Avalon, which became available just last month. But the prevailing prediction is that it will run into red figures this year too.

      The Japanese firm sold 6,027 cars here from January to September, down 24.8 percent on-year. Over the same period, BMW sold about 25,000 vehicles and Mercedes-Benz and Volkswagen some 18,000 each.

      That contrasts wildly with Toyota's performance in the global market, where it takes the largest share. It sold 5.9 million vehicles from January to August this year and looks set to maintain top place with combined sales of 6.58 million vehicles if subsidiaries Daihatsu and Hino are taken into consideration, outdistancing GM and Volkswagen.

      Korea is clearly a difficult market for Toyota.

      Toyota Korea posted an operating deficit of W13 billion in 2010, W32.9 billion in 2011, and W12.7 billion last year.

      Experts attribute the poor performance to lack of competitiveness. The prices and quality of popular Toyota models are not necessarily better than those of moderately- or low-priced German or Korean models.

      A Hyundai Motor executive said, "Only about 10 Corollas, the world bestseller, have been sold here this year. The model isn't necessarily better than rivals like the Hyundai Avante or Sonata in terms of functions or design. It seems that there was no special reason for consumers to buy this model given the price is upwards of W20 million."

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