Import cars to grab 10% of Korean market by 2012

A number of officials in the import vehicle industry predict the timing of their breaking the 10 percent level of the market will be the first half of next year.

Several executives of foreign carmakers’ Korean units have reportedly forecast the timing would be as early as late 2011. Their market share in the local market is estimated to approach the 8 percent market during the first half of the year.

They say that more and more customers want to buy an imported car but not just because it’s foreign or more expensive.

“Korean cars are great now, but they believe there is too little choice and the price differences aren’t all that much these days anyway,” a dealer said.

“In the past imported cars were more of a status symbol than they are now,” he said. “But they just want something that is different.”

Over the past one year, foreign carmakers saw their combined market share in Korea climb by 1 percentage point.

They captured 6.5 percent of the local market with sales of 42,700 vehicles between January and May, up from 5.5 percent with 34,318 units during the corresponding period of last year.

In May, the foreign carmakers posted 6.8 percent market share by selling 8,777 units, according to the automotive industry.

In particular, their monthly sales exceeded more than 10,000 vehicles for the first time in March, grabbing 7.1 percent of the market.

Amid the robust import car sales over the past few years, the Korea Automotive Research Institute, has predicted that the nation’s import vehicle market is projected to undergo an overall expansion, with total sales surpassing 100,000 units this year.

The KARI said sales of import vehicles were projected to soar by 12.1 percent on a year-on-year basis, crossing the 100,000 unit line for the first time.

Last year, sales of imported vehicles in South Korea climbed to a record high, indicating a rapidly growing demand here for luxury vehicles, a local traders’ group said.

A total of 90,562 imported vehicles were sold here in 2010, up 48.5 percent from a year earlier.

Small vehicles with low engine displacement are expected to account for 50 percent of the total sales of import vehicles in South Korea as early as the third quarter.

Notably, the ratio of cars with an engine capacity of less than 2.0 liters to the total number of cars sold came to 45.2 percent as of May.

They sold 3,969 small-sized cars ― at low and medium priced ― out of the total 8,777 units last month, according to the Korean Automobile Importers and Distributors Association.

Sales of the small-sized import cars have continued to increase over the past several months, posting noteworthy growth compared to 1,876 units (or 42.6 percent of the total sales) in April.

A year ago, the ratio of small cars to the total import vehicles stayed at 26.1 percent.

Dealers attribute Korean consumers’ active buying of small import cars to the recent trend that prices of some imported automobiles are as low as popular sedans of Korean carmakers.

Some European sedans are also priced at a similar level to Hyundai Motor and Kia Motors’ luxury sedans such as Grandeur and K7.

“As imported automobiles become increasingly commonplace in Korea, the market is shifting towards smaller, cheaper vehicles,” a foreign carmaker’s spokesman said.

In addition to the shift toward smaller engine capacity and lower price ranges, younger motorists make up an increasingly large proportion of imported car buyers.

According to industry data, about 40 percent of imported vehicles sold in May were bought by those in their 20s and 30s.

Foreign cars were long considered extravagances and only for the rich and powerful. There were even rumors that owning one was cause enough to get a tax audit.

Import car dealers predict that sales of imported cars priced under 50 million won will continue to increase in the coming years and push up the sales ratio of lower-price cars among imported automobiles.

By Kim Yon-se (kys@heraldcorp.com)