Car market polarization deepens

Car market polarization deepens

Based on article from Korea Times July 2, 2013

Mitsubishi closes three showrooms

 

 


Mitsubishi Outlander

CXC, the local importer of Japanese Mitsubishi Motors, said Monday that it decided to temporarily stop operating all its three showrooms amid prolonged sluggish sales.

“We have closed our showrooms and stopped selling vehicles,” an official from CXC said. “Due to the prolonged slump in sales, we first tried to sell vehicles in stock in the past few months without importing new vehicles.”

CXC has three showrooms in Yeouido and Banpo in Seoul and Bundang in Gyeonggi Province with five models in its lineup. CXC is an importer and dealer of Mitsubishi vehicles and Italian Iveco commercial vehicles, whose majority shareholder is Choi Hyun-ho, a nephew of late Hanjin Group founder Cho Joong-hoon.

But it has suffered snowballing deficits due to poor sales here with only 99 Mitsubishi vehicles sold in the January-May period.

But the firm made it clear that the shutdown doesn’t necessarily mean the withdrawal of their business.

“We are now in negotiation with the Japanese automaker about conditions of our business and new models that we want to import,” the official said. “If we reach a satisfying agreement, we can resume our sales of Mitsubish vehicles as early as the end of this year.”

If CXC decides to completely stop importing and selling vehicles from the Japanese brand, it will the second for a local importer to do so in recent years, following Subaru Korea.

In December, Subaru Korea announced that it had decided to withdraw its business as an official importer and dealer of the Japanese automaker from Dec. 31 due to snowballing deficits. The firm launched here in May 2010 but has struggled, selling only 76 vehicles in the last month before the withdrawal decision.

In fact, the imported car market here has been growing significantly but dominated by only a handful of automakers, mainly four German firms such as BMW, Mercedes-Benz, Audi and Volkswagen.

According to the Korea Automobile Imports & Distributors Association (KAIDA), imported automotive brands have garnered a market share of over 10 percent in the local market on the back of solid sales.

But the dominant positions of the four German companies combined market share stood at over 60 percent, meaning 19 other brands are fighting for the remaining less than 40 percent.

In May, foreign automakers sold a total of 13,411, up 0.7 percent from the previous month and 14.5 percent from the same period last year.

By brands, BMW topped the market by selling 2,663 vehicles, followed by Mercedes-Benz with 1,995, Volkswagen with 1,952 and Audi with 1,632.

But French automaker Citroen sold only 44 vehicles with Italian brand Fiat selling 16, even much lower than Porsche with 214.

But market insiders said the local imported car market will be changed so that volume car makers will enjoy booming business.

“The local imported car market was created by a few premium brands, and local automakers such as Hyundai Motor have long dominated the volume car market,” said KAIDA Executive Managing Director Yoon Dae-sung. “But things will change soon as we are in a transition period. Like other markets, volume car makers will have a bigger market share as their cars will be more affordable here.”