Non-Korean Carmakers Target Korean Market

Yestersday's blog focued on the Korea's Big Car market...this Korea Times article paints a picture of the rising import threat.

For example, non-Korean carmakers will launch 80 new models in the Korean market this year, compared to about 20 models planned by domestic Korean carmakers.

Aside from the big three automakers, or Mercedes-Benz, BMW and Lexus, more foreign players are preparing for an all-court press to increase their sale.

These foreign carmakers have an eye on an increasing number of Koreans who can afford to buy the imported cars that come with a stiff price tag. [with tariffs and VAT it usually doubles the price of the import]

They are joined by foreign carmakers with less influence in Korea, including Audi, Volvo, Peugeot, Saab, Cadillac, DaimlerChrysler and Volkswagen.

Volkswagen, which set up its Korean office a year ago, will likely be the most aggressive as it is launching 15 new models in 2006. It will be the first foreign carmaker to unveil more than 10 models per year.

Volkswagen Korea, which took the place of seventh in sale in 2005, hopes to top Korea’s imported car market in sales within four or five years by introducing reasonably priced vehicles.

Its 2006 new models include New Beetle 2.0, Golf GTI 2.0T, Jetta 2.5, Passat Variant 2.0FS, Touareg 5.0 V10 TDI and Pheaton 4.2 V8.

It is attracting a number of domestic car-owners with the introduction of Passat 2.0, which is priced at $30-40, 000. That release raised its market share among imported brands.

Peugeot will release seven new models, starting the launch of its New 607 3.0 sedan on Jan. 12. It saw annual sales double in 2005.

The French automaker plans to provide 607 celebrities, such as politicians and actresses, with trial rides for effective marketing of the New 607 3.0 sedan.

Volvo and Saab will introduce six new models, respectively. In particular, Volvo will release four new models, such as S60 2.4 D sedan and XC 90 AWD D5 sport utility vehicle, in January.

About 200 customers have already made advance orders for Volvo’s four diesel fuel models to be unveiled this month. Volvo ranked ninth here by selling 1,260 units in 2005.

Though Volvo and Saab have been taken over by global carmakers in Europe and the U.S., many drivers associate the cars with Sweden and safety.

Audi, which has been popular among younger Korean customers, will further respectable sales this year by launching four new models, including sports sedan RS4.

DaimlerChrysler Group plans to find a niche with its four new models, such as Chrysler’s 300C Diesel and Jeep’s Commander.

BMW will also release four models, including 650i Convertible and Z4 3.0si Roadster, and Mercedes-Benz will still focus on premium customers by introducing M Class and S600 in the first half.

Why Now?
First, barriers that long exsisted have been dropped , outside tariffs and VAT. This is reflected in a huge increase in new modelS. For example, 29 models in 2002, 46 in 2003, 51 in 2004 and 63 and 2005.

Their combined market share for imports is expected to reach 4 percent in 2006.