While Korean automakers are enjoying a remarkable comeback in domestic sales, sales of imports - with the prominent exception of BMW - continue to languish.
'We're the first to suffer and the last to recover,' lamented Wayne Chumley, president of DaimlerChrysler Korea Ltd. Chrysler's main showroom was starkly devoid of buyers during the height of last year's economic crisis but customers are starting to trickle in again.
For the first 11 months of 1999, domestic sales were up nearly 50 percent compared with the previous year. But importers have little to celebrate, despite their 13 percent growth. Koreans purchased only 2,163 imported vehicles, according to the Korea Auto Importers and Dealers Association.
Imports now account for less than 0.5 percent of the total market, compared with 1996, when imports peaked at 0.8 percent. BMW leads the pack with 739 cars sold, accounting for 34 percent of all imports.
BMW's car sales are up by over 200 percent and Land Rover sales are rose more than 400 percent. With Land Rover included, BMW's total share of the import market climbs to 45 percent. The company's pre-crisis market share was 15 percent.
'If it weren't for us, there would be no (imported car sales) recovery,' said Karsten Engel, president of BMW Korea Co. Ltd.
While competitors trimmed operations during the recession, BMW spent more to upgrade facilities and training. The company set a precedent among importers by opening a factory-approved used-car showroom.
'We did everything to keep our dealers going financially,' Engel explained, 'so we didn't lose a single dealer. We made a decision to make a long-term investment rather than cut back during the crisis.'
BMW's helping hand included a $20 million low-interest loan to its largest dealer, Kolon Corp. In addition, BMW assumed all of the marketing and advertising expenses of its dealers.
The biggest bonus may have been BMW's decision to release cars to dealers on consignment. That relieved dealers of the burden of financing their inventory. BMW has 15 showrooms nationwide, more than all European brands combined. That includes a used-car showroom devoted exclusively to BMWs.
'It's the first professional used-car dealership in Korea and we intend to open more,' Engel explained.
Renault, Peugeot, Fiat and Audi are not represented in Korea because of recent decisions to restructure their Korean operations. Nearly 45 percent of BMW's Korean sales are 5-series sedans, while 25 percent are 7 series.
For BMW, no other market generates such a rich model mix. It is a revealing sign of the Korean customer's propensity for high-end luxury.
With an economic growth rate projected at 10 percent this year, Korean consumer confidence has returned with a vengeance. But lingering misperceptions about foreign cars are keeping buyers away from showrooms.
A recent consumer survey by J.D. Power and Associates concluded that foreign automakers must battle the public's perception that buying imported cars hurts the Korean economy.
'The big problem is the customer's perception that if you buy an imported vehicle, you're not patriotic,' said Chumley of DaimlerChrysler. 'We want to make the Korean consumer undestand that imports are good; that it makes their industry more competitive.'