Automakers go diesel to outdo importers

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Automakers go diesel to outdo importers

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Infiniti Q50 and GM Korea’s Malibu diesel

Korea’s car import market has been characterized by two trends: diesels and Germans. However, non-German auto brands are rushing to release large diesel sedans in a bid to challenge German automakers and stir the market.

According to data from the Korea Automobile Importers and Distributors Association (Kaida), 69.4 percent of new foreign cars sold in Korea in the first quarter were diesels, up 7.5 percentage points from last year. Imported car sales in the first quarter increased 27.1 percent year-on-year to 44,434 units.

Diesel’s dominance of the imported auto market is a recent development. In 2011, diesel cars accounted for only 35.1 percent of import sales, but in 2012 its share jumped to 50.9 percent, and last year it reached 61.8 percent.

Industry observers said that consumer preference for diesel cars has boosted sales of German brands that are at the cutting edge of diesel technology. German companies focus on reducing noise and enhancing fuel efficiency and performance.

“The diesel engine today has advanced a lot, and German automakers have the technology to take advantage of it along with a premium brand image,” said Kim Pil-soo, an automotive engineering professor at Daelim University College.

German brands make up 72.7 percent of imported car sales and eight of the top 10 best-selling imported car models in the first quarter are German, according to Kaida data.

The top four German brands - BMW, Mercedes-Benz, Volkswagen and Audi - have enjoyed brisk sales of their midsize sedans despite other notable competitors.

Korean automakers have limited themselves to making diesel SUVs and subcompact or compact models, while Japanese and American brands have focused on hybrids.

Now, Korean makers are attempting to turn the tables by rolling out their own midsize diesel sedans, trying to send warning messages to the BMW 5-Series, Mercedes-Benz E-Class, Audi A6 and Volkswagen Passat. Hyundai Motor, the nation’s largest automaker, has already produced the i40 Saloon, which is slightly smaller than its Sonata. But the company hasn’t seen much success with the Saloon as consumers recoil from its high price.

The i40 Saloon, equipped with a 1.7-liter diesel engine, sells for between 27.85 million won ($26,800) and 31.15 million won, which is more expensive than the 2.0-liter gasoline model of the Sonata.

In another attempt to stifle German car makers, Hyundai will release a diesel version of its Grandeur premium sedan. The Grandeur Diesel is expected to debut at the 2014 Busan International Motor Show, which runs from May 30 to June 8.

Hyundai hasn’t divulged details of its Grandeur Diesel, but it is rumored to be equipped with a 2.2-liter diesel engine, and sales will begin in the second half of the year.

After Grandeur Diesel, Hyundai will proceed with the release of a Sonata Diesel next year. After the release of the seventh-generation LF Sonata last month, Hyundai officials said that the company has already developed a diesel engine for the LF Sonata that will meet the Euro 6 emission regulations.

As Hyundai plans the release of its diesel Sonata and Grandeur, its small affiliate, Kia Motors, is also expected to introduce a diesel version of its K5 midsize sedan and K7 full-size sedan to match.

GM Korea has already joined the competition by unveiling its midsize diesel sedan, the Chevrolet Malibu, last month. The nation’s third-largest automaker said its 2.0-liter turbo diesel engine manufactured in Kaiserslautern, Germany, by Opel will perform at least as well as a German car.

Although it is too early to judge how Malibu Diesel sales will fair, data shows that the release of a diesel version should lead to an overall increase in Malibu sales.

According to GM Korea, the company sold 1,378 Malibus last month, up 64.8 percent from February. The company said that sales of the diesel version made up more than 15 percent of total Malibu sales.

Meanwhile, Renault Samsung Motors, the nation’s smallest automaker, is considering releasing a diesel version of its SM5 midsize sedan, taking advantage of France-based mother group Renault’s diesel technology.

On the Japanese side, Infiniti’s Q50, the first model to wear Infiniti’s new “Q” badge, is already experiencing huge success in combatting the Germans.

Since the release of the Infiniti Q50, the luxury arm of Nissan sold 574 units in February and March, an increase of 187 percent year-on-year.

In fact, Q50 sales accounted for more than 80 percent of total Infiniti sales in the past two months.

Infiniti said that the Q50 is much more attractive than its previous make, the M30d, because it is equipped with a 2.2-liter diesel engine made by Germany’s Daimler AG. The Q50 sells for 40 million won, about 10 million won lower than its German competitors.

While the Q50 becomes a hit, Nissan Korea is busy placing orders with headquarters. The company said it has made more than 700 orders for the Q50 since its release. Last year, Infiniti sold 1,116 units in Korea.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]



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