SEOUL - In a pre-emptive strike against weakening demand in Korea, GM Daewoo Auto & Technology Co. has taken a page from the marketing book of parent General Motors and launched incentives on most of its car line.
Korean automakers typically don't offer incentives or discounts in January, a month when they often launch models. But after GM Daewoo introduced its incentives on Jan. 2, market leaders Hyundai Motor Co. and its affiliate, Kia Motors Corp., which together have a market share of about 70 percent, quickly followed suit.
The GM Daewoo program offers buyers a 1 percent discount on monthly installment payments on vehicles purchased this month. The offer covers all models except the Matiz minicar.
Alternatively, cash buyers will receive discounts potentially worth as much as 1.3 million won, or about $1,085 at current exchange rates. That's equal to about 7.3 percent of the $14,775 sticker price of GM Daewoo's top-of-the-line Magnus sedan.
"GM Daewoo is offering the discount until the end of January as part of its effort to overcome very weak local car demand and also to significantly upgrade its current local market share of 10 percent," says GM Daewoo spokesman Kim Sang Won.
He says the incentives had brought "more phone calls and visits by potential buyers to our showrooms," but he did not quantify the increased showroom traffic.
Hyundai Motor is offering discounts of as much as $665, while Kia Motors is offering discounts of as much as $585, or 5 percent of the price of the Optima.
"Hyundai is offering discounts as part of its effort to overcome the industry's sluggish local sales," Hyundai Motor spokesman Jake Jang says.
The Korean market slid 18.7 percent last year to about 1.82 million units amid widespread consumer skittishness over the state of the economy. But analysts expect demand to pick up this year ahead of the general election in April.
Private spending usually picks up ahead of big elections in Korea as the government loosens monetary policy.
GM Daewoo was formed when General Motors, Suzuki Motor Corp. and Shanghai Automotive Industries Corp. purchased most of the assets of Daewoo Motor Co. GM owns 44.6 percent of the Korean company and has management control.