American cars still behind the curve
Foreign automobiles have taken a similar path in Korea. Only 13 years ago, after the foreign exchange crisis, foreign cars were looked at with a jaundiced eye. It was common for owners of foreign cars to be targeted for tax investigation. When a foreign car was parked on the street, it often suffered minor damage, such as a broken side mirror or scratches. In an effort to eliminate these negative images, “foreign cars” are now called “imported cars.”
The car market opened up a year before the cigarette market. In 1987, only imports with an engine displacement higher than 2,000 cubic centimeters and lower than 1,000 cubic centimeters were allowed. In the first year, only 10 import cars were sold. In 1994, the tariff rate went down to 8 percent and the acquisition tax rate was lowered, spurring import car sales. But sales were still slow. The market share of imported cars was just over 1 percent in 2002, 15 years after the market had opened. In 2007, brands such as Honda and Volkswagen joined a market previously dominated by luxury carmakers such as BMW and Lexus - and foreign automakers’ market share grew to more than 5 percent. This year, import car sales will likely exceed 100,000 units for the first time in Korea.
In the U.S., cars made by Hyundai have shed their image as cheap and are selling well. But some people are not happy with this, most notably U.S. President Barack Obama. Last week, on a visit to a battery plant in Michigan, he said: “We’ve got a lot of Americans driving Kias and Hyundais. I want folks in Korea driving Fords and Chevys and Chryslers.”
The U.S. government still suggests that there has to be a reason why American cars are not selling well in Korea. At present, U.S. cars are at a disadvantage and consumers just don’t prefer them. European cars continue to be popular in Korea, comprising more than 65 percent of the import car market last year, followed by Japanese cars.
And even in the U.S., not many American cars are popular. Before he gets down on the Korean market, Obama may first want to ask American carmakers why their automobiles are so unpopular, even at home.
*The writer is an editorial writer of the JoongAng Ilbo.
By Shim Shang-bok