SEOUL -- Park Ki Nam, fed up with driving his faded local sedan for years, could not wait to buy the best-selling imported car in South Korea -- a Toyota Lexus.
Park splashed out 110 million won ($93,850) on a new car, a Lexus LS 430, straight after a test drive, joining a rush to South Korea's dealerships that spurred a 21 percent jump in sales of foreign cars in 2003.
That stellar performance by foreign car makers -- whose growing market share is still tiny at about two percent -- stands in contrast to Hyundai Motor Co. and smaller South Korean car makers. They suffered an 18 percent fall in local sales.
The affinity of South Korean buyers for imported cars is growing thanks to aggressive marketing and a changing perception toward ownership of imported cars in a once inward-looking and industrially defensive country that now exudes export confidence.
High-tech quality models and a global brand image are also increasingly attractive to the country's more affluent youth. Foreign tie-ups with local distributors are widening the reach.
Foreign auto makers such as world number one General Motors and France's Renault SA have also taken key stakes in South Korean auto assets.
"I was in a car accident with a local rear-wheel-drive vehicle while test-driving. You know what happened after the crash?" Park said.
"The Lexus was left almost unscathed, while the other vehicle had a big dent. I signed up for the car not just for the snappy design but for the safety."
Foreign car makers say the potential for growth is vast in a country of 48 million people, about 30 percent of whom own cars, and as a reviving economy looks set to fuel spending on vehicles.
Sales of imported vehicles are forecast to continue double-digit growth and market share will grow to between four and five percent by around 2007, industry sources said.
"The imported car market is in a growing stage," said Seo Young Eun, BMW Korea's corporate communications executive.
"Lifestyles are changing rapidly and this is, in turn, helping to demolish a psychological barrier that has long made consumers hesitate to buy foreign cars."
But a tariff of eight percent on imported auto purchases remains a key barrier to foreign players. Japan imposes no tariff on foreign cars and the United States levies 2.5 percent. The European Union imposes 10 percent.
About 19,460 foreign vehicles were sold last year, representing a two percent share in South Korea, data from the Korea Automobile Importers and Distributors Association (KAIDA) showed.
Imports make up more than a quarter of car sales in the United States and more than five percent in Japan.
Hyundai Motor exported more than 400,000 vehicles to the United States last year alone. South Korea is the world's seventh largest car-producing country, rolling out 3.18 million vehicles, of which 1.82 million were exported last year.
Washington wants Seoul to open its auto market even more, though it has not filed any official complaint with the World Trade Organization. Multinational trade meetings have urged countries to further open their auto markets.
Imports of U.S. cars into South Korea are miniscule set against South Korean auto exports -- 1,340 from Chrysler, 1,579 from Ford, 240 from Cadillac and a handful of others to make a total of 3,168 last year, said Park Eun Seok of KAIDA.
Toyota Motor Co. has taken pole position in a market where there is still a patriotic undercurrent due to memories of Japan's 1910-1945 occupation of the peninsula.
In its fifth year of operation, Japan's Toyota now outsells German luxury car maker BMW, which has dominated South Korea's imported car market in recent years. Toyota has ranked first in sales since last October.
But for all of 2003, BMW topped the sales list with 5,432 cars, followed by Toyota at 3,772 and Mercedes-Benz at 3,117.
"Quality, prices, services and brands -- that's what customers care about and that's what has led to Lexus's success in Korea," said Karen Seo, a Toyota Motor senior official.
Toyota's hot-selling Lexus ES 330 costs 55.8 million won, a competitive price that could lure shoppers away from Hyundai's deluxe EQUUS and Ssangyong's Chairman. They sell for between 50 million and 70 million won.
Toyota forecast sales of up to 4,500 vehicles this year, up about 20 percent from 2003. It plans to increase the number of its dealerships to nine from five and set up a financing unit this year.
Competition is likely to heat up even further because foreign car makers have enlisted domestic backers to grab a bigger market share. New models are also coming on stream.
Japan's Honda Motor Co. and Nissan Motor Co. have also set their sights on the South Korean market this year.
"Some 50 new models could be made available this year including sedans, convertibles and SUVs to meet customers' diverse demands," said Kim Kye Won, a senior KAIDA official.
"Local partnerships are helping foreign car makers to make forays into the Korean market due to a good sales network nationwide," Kim said.
Conglomerate Doosan Group will become the sales arm of Honda's business in South Korea, competing with other mid-tier groups such as Hyosung Group and Kolon Group that back Mercedes-Benz and BMW respectively.
Fiat's luxury Ferrari and Maserati, and PSA Peugeot Citroen will debut this year in South Korea, where about 18 global brands compete head-to-head, KAIDA said.