Foreign carmakers bet big on building brand in Korea

Foreign carmakers, having enjoyed success in the South Korean market in recent years, are now pouring more resources into image building.

Largely driven by German carmakers like BMW, Mercedes-Benz and Volkswagen, the import car market more than doubled to 156,497 vehicles over the past five years.

In 2013, their sales cornered 12 percent of the market where the powerful Korean duo ― Hyundai Motor and Kia Motors ― dominate with almost 70 percent of car sales.

Having extended dealership and after-sales networks and socially responsible activities for years, the carmakers are now battling to add new values to car owners.

BMW, the market leader among foreign brands, recently unveiled an ambitious plan to renew the nation’s driving culture by opening its first driving center in Asia on Yeongjongdo Island, Incheon, in August.

The 77 billion won ($75 million) BMW complex, consisting of a 2.6-kilometer racetrack, brand galleries and other refreshment facilities, mimics the famous BMW Welt at the carmaker’s Munich headquarters. 

According to the Korean unit, the number of visitors, including executives of Korean and German rivals, has exceeded the 10,000 mark just one month after its official opening.

“Through the driving center, BMW Korea is seeking a paradigm shift in the nation’s driving culture,” said BMW Korea CEO Kim Hyo-joon.

BMW aims to see a record of 40,000 unit sales this year in Korea.

Its archrival Mercedes-Benz also opened a pop-up brand experience zone, “Mercedes me,” on a hip street of southern Seoul last week to appeal to young drivers. 

Unlike the first permanent store of the same brand name set up in the German city of Hamburg in June, the Korean makeshift facility focused more on promoting the carmaker’s compact models like the CLA and GLA.

“Currently, compact car sales make up less than 8 percent of the carmaker’s total sales in Korea,” said Choi Duk-jun, sales chief and vice president of Mercedes-Benz Korea. “We will ramp up efforts to lure young customers.”

Buoyed by strong sales in large sedans along with the hot-selling CLA, the Korean unit has set a sales goal of more than 30,000 vehicles this year.

Japanese carmaker Toyota, which has maintained a low profile with modest sales here, is also hopping onto the bandwagon to strengthen its brand image.

On Thursday, the carmaker opened “Connect To,” a Toyota-themed brand gallery, on an 876.5 square-meter site within the brand-new Lotte World Mall in Jamsil, southern Seoul.

Visitors can experience Toyota’s future vision through futuristic concept cars, while enjoying quality tea and dessert, carefully sorted by the carmaker.

“This is the outcome of two years of hard work with our headquarters,” said a Toyota official. “Rather than lowering prices to sell more cars, we will invest more on elevating our brand image here.”

Yoon Dae-sung, executive manager of the Korea Automobile Importers and Distributors Association, the largest business lobby group for foreign brand cars here, predicts more new experiments will be made by carmakers here. 

“Unlike in Europe where many of luxury buyers are pensioners with purchasing power, Korea is a more dynamic market for young drivers in their 30s,” he said. “Carmakers want to use Korea as a test bed for their marketing experiments.”

By Lee Ji-yoon (jylee@heraldcorp.com)