BMW, others lead shake-up of once-closed Korean market
South Korean automakers may threaten the global dominance of automakers such as Volkswagen and Toyota, but they are losing ground at home to fast-growing rivals. Imports from foreign brands -- especially premium automakers such as BMW and Mercedes-Benz -- have been rising for years despite an overall market that has been stagnant at about 1.4 million units.
Last year foreign automakers accounted for 11.6 percent of total South Korean new-car sales, up from just 0.4 percent in 2000. Import brands are poised to boost their share to 13 percent this year -- which is about 180,000 units -- and could increase their stake to 20 percent as soon as 2016. Premium brands have played a key role in the increased market penetration. They have almost tripled their volume in the past five years, growing to 97,054 last year from about 36,096 in 2009. In the first half of this year they grew 26 percent to 58,437 units.
The growing wealth of local customers and progressive implementation of free trade agreements with Europe and other countries have been significant factors in the market shift. Tariffs on EU imports with engines above 1.5 liters were eliminated completely in July. Duties on U.S. imports will end within three years.
“The top 10 percent of the population here has 37.7 percent of the country’s income and 1 percent owns 40 percent of the nation’s assets,” said Dae Ryun Chang, professor of marketing at the Yonsey School of Business in Seoul. But the wealth is spreading. An increasingly affluent middle class is responsible for the double-digit sales growth in the luxury market, raising the value of luxury good sales to more than $5 billion last year.
Chang said these car buyers include the so-called Gold Misses, a growing group of single women in their late 20s to early 40s who typically earn from twice to 10 times the national average of 23,838 euros. Chang said that “sophisticated Korean consumers do not consider Korean auto brands and products as premium.” This perception has been particularly good news for manufacturers such as BMW, Mercedes and Audi. The three accounted for four out of every five premium cars sold in Korea in the first half of this year, or 7.2 percent of total Korean car sales. The Gold Misses account for 42 percent of Mini sales in Korea. BMW has been the leading premium car brand in Korea for 17 of the last 19 years.
You can reach Luca Ciferri at firstname.lastname@example.org.