German carmakers expand biz realm into local used car market

Three German carmakers that have been making solid inroads into South Korea's market in recent years are moving to expand their business realm into the used car sector, local industry sources said Friday.

The move first set into motion by luxury brand BMW, which has been operating its "premium selection" collection since 2005, is being emulated by Mercedes-Benz and Volkswagen (VW).

These three carmakers combined sold 52,278 vehicles in the first half of 2014, up 33.1 percent from 39,267 units sold a year earlier, data released by the Korea Automobile Importers and Distributors Association showed. The rise in sales easily outstripped 26.5 percent gains for all imported cars in the same period.

"Companies are trying to capitalize on the fact that people who buy used foreign cars are more likely to buy new models of the brand they have driven, which can translate into more sales," an industry source said.

By taking direct control of the used car market, these companies can better control the quality of their vehicles being resold and give greater peace of mind to prospective customers looking for pre-owned vehicles.

"This is important since cars made by the three companies accounted for more than half of all foreign-made cars sold in the country this year. That means a large used car market," the market watcher said. 

Of the three, VW is the latest entrant, having announced that it will select dealers to manage its used cars in August and September.

The local sales arm of the German automotive giant said details need to be worked out, but local dealers may follow practices employed in Germany.

German dealers handle cars made by other brands, but with VW vehicles, they carry out strict checkups and give those that pass the Das WeltAuto certificate of quality.

Mercedes-Benz, which already runs the Seoul Auto Gallery in southern Seoul, said it will start handling cars by other makers, while carrying out detailed technical checks on 178 key aspects of its own second-hand cars so that they can be resold with Star Class certificates.

It said cars with certificates will cost 5 percent more than those sold at the regular used car market, yet new buyers will be assured that the car they are buying is in perfect working order with no problems.

Mercedes-Benz said it wants to open two more exhibition galleries for its used cars within the year.

BMW not only runs its premium selection network but also has a dedicated Internet website (www.BPS.co.kr) to fuel sales of its used cars. It said it wants to add one more exhibition space by year's end and another in 2015. It currently has eight used car galleries in the country.

The German luxury carmaker reported selling 2,500 used cars last year in South Korea and expects the number to go up to 3,600 in 2014. (Yonhap)