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VW’s Korea sales decline 33.1 percent

Published: 06 Jul. 2016, 20:25

German automaker Volkswagen’s sales to Korea dropped significantly over the first half of this year as its emission-rigging scandal is yet to be settled in the nation.

Accumulated sales of Volkswagen for this year until June plummeted 33.1 percent year on year according to Korea Automobile Importers and Distributors Association on Wednesday. It is the biggest decline among import car brands operating in Korea.

By monthly performance, its June sales dived further by 57.6 percent compared to a year before recording 1,834 sales. The number is even smaller than 2,326 car sales in May.

Domestic customers of Volkswagen were infuriated again last month as the automaker agreed to pay up to $15 billion for compensation in the United States but has failed to come up with a concrete recall plan in Korea.

Approximately 10 months have past after Volkswagen admitted to installing a so-called defeat device on a number of its models last September. However, no progress in terms of customer compensation has been made in the nation with its recall plans being rejected three times in a row by the Ministry of Environment.

Volkswagen Group’s luxury brand Audi also tumbled by 10.3 percent in the first half this year.

Last year, it seemed as though the scandal did little to drag consumers away from import cars including Volkswagens.

Volkswagen’s sales tumbled in October, right after the scandal, but eventually recovered largely due to its aggressive promotions. The automaker’s most popular model Tiguan 2.0 TDI BlueMotion SUV even topped the import car sales in the Korean market. It alone had sold 9,467 units followed by Audi’s A6 35 TDI sedan.

However, overall import brands have been turned down this year with Volkswagen leading the drop. Import car sales through first half of the year closed at 2.2 percent decline.

“Import brands are showing weak performances this year, in particular the Volkswagen, but I see it as a short term effect caused mostly by lack of supplies from foreign headquarters and long time it takes for the supply,” said Lee Jung-hun, an analyst at Yuanta Securities.

“German automakers have a strong customer base and when the new model of Tiguan is introduced to the Korean market by the second half of the year, sales results may find another turn.”

A spokesperson from the automaker had also pointed to supply shortages as the main reason for the sales decline.

BY KIM JEE-HEE [[email protected]]