Hyundai and affiliate Kia’s dominance of the Korean auto market has begun to ebb as a free-trade deal and a stronger won boost sales of imported European brands, such as BMW and Mercedes Benz.
The twin developments are also fueling luxury auto sales as car buyers now have more foreign brand choices. Still, Hyundai and Kia made up 62 percent of nationwide sales including imports last year.
South Korea’s imported passenger vehicle sales have surged 31 percent a year on average since 2011, when the free-trade agreement with the European Union resulted in lower tariffs.
The surge may continue as the won has appreciated more than 20 percent against the euro and 9 percent against the yen since the beginning of 2014. Sales of foreign brands, including BMW, Mercedes and Volkswagen from Germany, accounted for 17.6 percent of the market in 2014, up from 8.5 percent in 2011.
BMW, Mercedes and Volkswagen accounted for 72 percent of South Korea’s imported passenger vehicle sales last year. That includes VW’s Audi unit and BMW’s Mini.
The German carmakers’ dominance probably reflects buyers’ perception of the cars’ quality.
In total, European cars made up 80 percent of imports, with the rest consisting mainly of US and Japanese brands.
Total import sales surged 26 percent, according to the Korea Automobile Importers & Distributors Association.
This article was contributed by Steve Man, senior auto sector analyst at Bloomberg Intelligence.
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