Local carmakers struggle at home

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Local carmakers struggle at home


A U.S. coffee chain outlet in Seoul served as one stop on Hyundai Motor’s ‘Brilliant Showroom Tour” last year for owners of its cars, a marketing ploy it used to reward customers and boost sales. Customers were able to choose from a number of themed programs, including “flowers” and “coffee,” and were taken to various locations in the capital to learn more about their production and distribution. Provided by the company

Korean automakers sold more than eight million vehicles last year for the first time, but concern is mounting as they continue to struggle on the domestic front despite robust sales overseas.


According to data from five local automakers, their global sales totaled 8.19 million units in 2012, up 5.6 percent from the previous year’s 7.75 million units. Domestic sales slumped 4 percent on-year to 1.4 million units. This is the first time since 2008 that domestic sales marked negative growth.

Renault Samsung Motors, the nation’s fourth-largest carmaker, fared the worst as its Korean sales almost halved to 59,926 units. Leading automakers and affiliates Hyundai Motor and Kia Motors saw their combined domestic sales fall more than 2 percent.

GM Korea and Ssangyong Motors were the only two local carmakers to post gains at home last year.

Making matters worse, this year looks like a case of more of the same.

According to the Korea Automobile Manufacturers Association (Kama), local automakers’ domestic sales in 2013 will stay at around 1.4 million units. The government ended a consumption tax cut on the first day of the year, and Kama said this coupled with an uncertain economy will decrease demand for vehicles.

Rising sales of imports present another roadblock to stronger sales at home. Kama estimated that sales of imported cars will grow 13.6 percent to 150,000 units in this year. The nonprofit group for car manufacturers said that additional tax breaks from free trade agreements with the U.S. and European Union will attract more customers, while the introduction of small cars with affordable price tags will also appeal to Koreans.

Korean automakers have also set conservative domestic sales targets.

Hyundai is eyeing 668,000 units, up 230 from 2012, while Kia lowered the figure by 2,000 units from last year to 480,000.

Although sales of small cars will stay healthy as fuel economy ratings become more important amid high gasoline prices, Kama forecast that sales of mid- and full-size models will drop this year.

Domestic sales of Hyundai’s Equus, the carmaker’s flagship luxury sedan, went down 30.9 percent on-year with just 9,317 units sold in 2012. Sales of Genesis also fell 21.7 percent, while those of the Grandeur (Azera in North America) also fell 17.7 percent. Even the Sonata, Hyundai’s popular midsize sedan, dropped in popularity.

Kia’s K5 (Optima) and K7 (Cadenza) also marked double-digit negative growth in 2012, marking respective on-year drops of 10.9 percent and 14.9 percent. Sales of its K9 flagship sedan (Quoris), which was introduced in May, have also been poor.

By Joo Kyung-don [kjoo@joongang.co.kr ]

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