BMW expands sales in Korea to reclaim the crown from Mercedes

Industry

Published: 16 Mar. 2023, 16:04 Updated: 17 Mar. 2023, 08:58

BMW expands sales in Korea to reclaim the crown from Mercedes

Samsung Electronics Executive Chairman Lee Jae-yong, left, speaks with BMW CEO Oliver Zipse at BMW’s driving center in Yeongjong Island, Incheon, on Dec. 17. [SAMSUNG ELECTRONICS]

Mercedes-Benz has basked in its status as the best-selling imported carmaker in the Korean market for almost a decade, but BMW is quickly catching up to overtake the top position.

The latter German automaker is quickly expanding its sales in Korea through aggressive investment and strengthened after-sale service to mend its reputation hurt by a series of fire incidents in 2018.

BMW sold a total of 12,470 vehicles in Korea during the first two months this year, up 11.3 percent compared to the same period a year earlier, according to data from the Korea Automobile Importers & Distributors Association (Kaida).

That's a significant difference from its rival German automaker Mercedes, which sold 8,419 cars in Korea during the same two months.

BMW failed to outrun Mercedes by a nose last year, holding 27.7 percent of Korea’s imported auto market, up by more than 10 percentage points compared to 2019.

Mercedes’ share dropped to 28.6 percent from 31.9 percent during the same period.

Having entered Korea in 1995 as the first imported automobile brand, BMW maintained its No. 1 spot for over two decades.

The tables turned in 2016, however, with the introduction of Mercedes’ new E-class and a series of fires involving BMW diesel-powered vehicles.

But sales of BMW vehicles have rapidly started growing in Korea recently due to its best-selling Series 5 sedans. The BMW 520 sedan has been the most beloved imported vehicle for four consecutive months from November last year, beating Mercedes’ best-selling E250.

BMW’s aggressive investment in Korea is also considered a contributing factor.

People who purchase BMW cars in Korea are qualified for a 200,000 won ($154) subsidy from the Korean government, the only imported brand eligible for the subsidy.

BMW's latest 5 Series [BMW KOREA]

The Korean government offers a 200,000 won subsidy only if the brand has established at least 100 ultra-fast EV chargers across the country, complementing their dedication to developing EV infrastructure in Korea.

BMW has 877 EV chargers in Korea, a threefold jump from 2020, of which 282 are ultra-fast chargers. It recently announced a plan to build 200 more chargers by the end of the year.

Mercedes has five ultra-fast chargers in Korea, while Audi has 48, along with 102 normal chargers. Porsche has 67 ultra-fast chargers, while Volvo runs 36. Volkswagen has zero.

“Since 2014, BMW has invested more than 11.5 billion won in building chargers in Korea,” said a BMW spokesperson.

“The 200,000 won subsidy is not a huge amount, but it shows how serious BMW is about improving the EV infrastructure in Korea.”

A recent report by Deloitte showed that 42 percent of Korean drivers picked “lack of charging infrastructure” as the factor they are most concerned about when buying EVs. Forty-nine percent cited the “long charging time.” The consulting firm interviewed a total of 893 Koreans, with multiple answers allowed.

BMW 7 Series are parked at BMW Driving Center in Incheon [BMW KOREA]

BMW has gradually been narrowing its gap with Mercedes. Mercedes sold only 2,431 more vehicles than BMW in 2022, compared to 2019 when the gap was around 34,000.

BMW also agreed to abide by the Korean government’s regulation for automakers in 2019, which requires them to exchange or reimburse customers for recently purchased vehicles that exhibit problems.

The measures, similar to the U.S. "lemon laws," apply to vehicles bought less than a year prior that have exhibited a major fault that persists after two repairs or a minor issue that persists after three repairs. The regulation must also be stipulated in written purchase contracts.

BMW will introduce a total of 10 new vehicles in the Korean market this year, including its sub-brand Mini. A fully revamped Series 5, the best-selling model in Korea, and a partially revamped X5 and X6 are slated to be introduced in the second half.

But the key to victory depends largely on who sells more pricey cars.

Of all Mercedes cars sold in Korea last year, 31,576 units cost 100 million won more.

During the same period, only 22,372 BMW vehicles were sold at 100 million won or higher.

BMW introduced its latest Series 7 in December, the first fully revamped version released in seven years. Only 404 were sold for two months, compared to its rival Mercedes S-Class that sold 1,661 during the same period.

BY SARAH CHEA [chea.sarah@joongang.co.kr]