Korean Carmakers Struggle to Defend Home Turf
Based on article from The Korea Times Jan. 22, 2013
Nearly one out of ten passenger cars registered in Seoul last year were made by foreign automakers, data showed, indicating the rising popularity of foreign cars.
The market share of imported brands has been rapidly increasing in the past few years and surpassed 10 percent for the first time last year. They sold 130,858 vehicles, up 24.6 percent from the previous year.
Industry insiders forecast imported cars will continue to expand their presence here by aggressively marketing their products after lowering prices and adding more affordable models to their lineups.
Marketing Insight, a local automotive-specialized research firm, forecast their market share will jump to 18 percent in 2015.
Currently, German firms BMW, Mercedes-Benz, Audi and Volkswagen dominate the imported car market, with a combined market share of 63.83 percent, while 19 others share the rest.
But market insiders believe minor players, especially Japanese firms whose products have been viewed less-favorably than European ones here, will be more aggressive in marketing to catch up with the frontrunners.
Such forecasts seem sure to threat the local automakers and now the question is how local players Hyundai Motor, Kia Motors, Renault Samsung Motors, GM Korea and Ssangyong Motor can cope with the competition from their foreign counterparts.
The number of consumers who would buy an imported vehicle for their next car purchase has continuously increased in the past 10 years, according to data from Marketing Insight.
A recent survey by the firm of about 30,000 drivers with the intention to buy a new car within two years showed the rate of people wanting a foreign car increased by 10 percentage points to 16.5 percent.
The number of consumers who wanted to buy Hyundai or Kia models has shown no decrease with the combined rate of purchase intention from both companies standing at 67 percent in 2012.
But the number of drivers planning to buy a Renault Samsung, GM Korea or Ssangyong has decreased to 16.8 percent from 31.5 percent in 2003.
“It’s obvious that more imported cars will be sold here and it will directly affect local automakers’ sales,” said Marketing Insight managing director Lee Kun-hyo. “Imported brands will eat into the market share of the three weak players first and then the two giants.”
He said the market share of luxury cars from domestic brands has already shrunk due to pressure from competitors from abroad.
“Local automaker’s compact car segments will be also affected, as foreign brands have already launched various small and compact cars, which used to be dominated by local firms,” he said.
Imported cars now have over 30 percent market share for premium cars with an engine capacity of 3,000 cc or bigger. But they also want a bigger stake in the local market by introducing more small and compact vehicles.
But the explosive growth of foreign brands has led to some complaints.
The market share of imported brands has been rapidly increasing in the past few years and surpassed 10 percent for the first time last year. They sold 130,858 vehicles, up 24.6 percent from the previous year.
Industry insiders forecast imported cars will continue to expand their presence here by aggressively marketing their products after lowering prices and adding more affordable models to their lineups.
Marketing Insight, a local automotive-specialized research firm, forecast their market share will jump to 18 percent in 2015.
Currently, German firms BMW, Mercedes-Benz, Audi and Volkswagen dominate the imported car market, with a combined market share of 63.83 percent, while 19 others share the rest.
But market insiders believe minor players, especially Japanese firms whose products have been viewed less-favorably than European ones here, will be more aggressive in marketing to catch up with the frontrunners.
Such forecasts seem sure to threat the local automakers and now the question is how local players Hyundai Motor, Kia Motors, Renault Samsung Motors, GM Korea and Ssangyong Motor can cope with the competition from their foreign counterparts.
The number of consumers who would buy an imported vehicle for their next car purchase has continuously increased in the past 10 years, according to data from Marketing Insight.
A recent survey by the firm of about 30,000 drivers with the intention to buy a new car within two years showed the rate of people wanting a foreign car increased by 10 percentage points to 16.5 percent.
The number of consumers who wanted to buy Hyundai or Kia models has shown no decrease with the combined rate of purchase intention from both companies standing at 67 percent in 2012.
But the number of drivers planning to buy a Renault Samsung, GM Korea or Ssangyong has decreased to 16.8 percent from 31.5 percent in 2003.
“It’s obvious that more imported cars will be sold here and it will directly affect local automakers’ sales,” said Marketing Insight managing director Lee Kun-hyo. “Imported brands will eat into the market share of the three weak players first and then the two giants.”
He said the market share of luxury cars from domestic brands has already shrunk due to pressure from competitors from abroad.
“Local automaker’s compact car segments will be also affected, as foreign brands have already launched various small and compact cars, which used to be dominated by local firms,” he said.
Imported cars now have over 30 percent market share for premium cars with an engine capacity of 3,000 cc or bigger. But they also want a bigger stake in the local market by introducing more small and compact vehicles.
But the explosive growth of foreign brands has led to some complaints.
“Now, the carmakers need to address the inconvenience of foreign car owners from the lack of repair centers to high maintenance costs and not only focus on selling more cars,” said Kim Pil-soo, a professor of automotive studies at Daelim College. “Otherwise, they simply won’t grow here.”
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