Wednesday, March 01, 2006

Korean Upward Mobility Indicator--Luxury Cars

It seems that almost every week an article surfaces on the Korean luxury car market. I see this interest in luxury cars as a strong indicator of societal and eceonomic upward mobility. At the top of the list are foreign luxury cars, which occording to this article are most popular in the Kangnam and Socho area of Seoul.

Korea Times

Of every four large-sized automobiles sold in South Korea, sedans and sport utility vehicles included, one is foreign.

Imported cars posted a market share of 23.9 percent in the sales of domestic and foreign automobiles with an engine capacity of 3.0-liter or more in 2005.

Foreign carmakers, such as Lexus and BMW, sold 11,350 large vehicles sized 3,000 cc or more, while the combined sales of large-sized cars, including domestic ones, was 47,296.

The ratio of 23.9 percent is noteworthy as imported cars captured only 3.27 percent of all (small, mid and large-sized vehicle) sales last year.

Imported cars accounted for only 7 percent of the large-sized automobile market five years ago, according to the Korea Automobile Importers & Distributors Association (KAIDA).

Prices of most large-engine capacity automobiles made by Mercedes-Benz and BMW exceed $110,000. No Korean cars are priced higher.[The Hyundai Equus is base priced at about $92,000.}

Foreign carmakers estimate the ratio of imported cars among the large-sized units sold in the Kangnam district, such as Kangnam and Socho wards, reaches about 50 percent. [Kangnam is located south of the Han River and an enclave of affulant urban upper mobile Korea. [Hyundai-Kia Group HQ is in Socho].

I often see premium imported cars running bumper to bumper on the streets of Kangnam,'' a BMW Korea executive said. Foreign cars will be under so-called commercialization in two or three years.

The trend indicates that more and more high income earners are buying bigger foreign sedans, SUVs and convertibles amid widening income disparity in Korea.

Netizens on the Internet portal of say wealthy housewives in Kangnam will not buy as many Lexus's ES or LS series if their prices were similar to those of domestic sedans.

While some netizens point out a bubble in the prices of imported cars here, many automobile dealers point out differences between foreign and domestic vehicles.

A senior dealer at Han Sung Motor, the importer of Mercedes-Benz in Sinsa-dong, southern Seoul, said the most important difference is safety.

In case of Benz, the width between front wheels and front seats is longer than that of most Korean cars, he said. The inner space of Korean cars, including middle-sized sedans, is generally wide. Safety cannot be secured because of the shorter width.

A spokeswoman of Hanbul Motors Corp., the importer of Peugeot, said more Koreans have preference in design as well as performance.

Mentioning TV entertainer Hong Rok-ki's recent purchase of a luxury SUV of the French automaker, she said a number of consumers are fascinated by Peugeot's aesthetic designs and stylish colors.

Foreign vehicles with an engine capacity of 3.0 liter or more accounted for 36.8 percent of the 30,901 imported cars sold in Korea last year.

Furthermore, more than one in 10 imported cars _ 13.9 percent _ were models with engine capacities exceeding 4.0 liter, the KAIDA reported.

Aside from the steady sales growth of large sedans and SUVs foreign carmakers also saw their sales of cars with engine capacities under 3,000 cc (or under 2,000 cc) rise

1 comment:

  1. Well, that's quite true. The industry of Korean automobile is quite increasing. However, I still love import cars from Japan for I think they are more reliable and efficient compare to Korean cars.