All lemons, no plums: American cars once reigned over the global car markets but, for reasons ranging from lack of efficiency in production to loss of ingenuity, U.S. carmakers are in a steep decline and losing market shares to other competitors, going with hat in hand to the govenrment for “survival’’ funds. Chrysler’s 300C, however, is one of the welcome exceptions. Korea Times File |
By Kim Tong-hyung
Staff Reporter
Kim Ki-young, a 34-year-old fund manager from Seoul, decided to buy an expensive car last spring and ended up with an Audi A4.
It was a tough decision to make, he says, not just because of its hefty 44 million won price tag but also due to a wide range of available models at that price range including Lexus or Infiniti models. However, Cadillac, Chrysler and Ford never crossed this mind.
``I can’t remember the last time I saw an American car and said `hey, that’s cool’,’’ said Kim, who says nobody ever recommended he should buy a U.S. car when he sought advice.
``The first word that comes to my mind when thinking about U.S. cars is `bulky,’ and you hear all the negative reviews about their fuel efficiency. I don’t think I have ever imagined myself in a Ford,’’ he said.
Automobiles were once the symbols of American ingenuity, but consumer trends in Korea as well as in the rest of the world serve as a distinct example of the Detroit motor industry’s dipping competitiveness.
According to the latest statistics by the Korea Automobile Importers and Distributors Association (KAIDA), 6,190 new U.S. cars were sold on the Korean market this year as of October, accounting for an 11.7 percent market share among imported cars.
In comparison, Japanese carmakers Honda, Nissan and Toyota combined to sell 19,127 cars, combining for a 35 percent market share. European cars, based on the popularity of German brands BMW and Mercedes-Benz, accounted for nearly 54 percent of all imported car sales.
U.S. carmakers have released 37 models on the Korean market since 2005, according to KAIDA’s report, compared with 26 Japanese models.
However, the annual market share of U.S. cars since then dropped to 12.3 percent, 11.2 percent and 11.7 percent for the following three years in that order. The market share of Japanese cars remained stable around 29 percent in 2005 and went up 33 percent in 2007.
``U.S. cars are being squeezed out of the market, as they can’t compete with their Japanese rivals in the small to mid-sized segment, while German cars like BMW and Benz have a tight grip over the premium segment,’’ said a KAIDA spokesman.
The poor sales of U.S. cars here have emerged as a touchy issue with Barack Obama elected as the next U.S. president. Obama had been a frequent critic of the free trade pact signed between Korea and the U.S. in April last year, citing an imbalance in the bilateral auto trade.
There is a possibility that the Obama administration could call for a renegotiation of the free trade agreement (FTA), which is now subject to ratification by the lawmakers of both countries, and the talks may include extending the tariff periods on exported Korean cars.
Obama got the facts roughly right when he said Korea was sending hundreds of thousands of cars into the U.S., while American producers were only selling a fraction of this in Korea. However, it remains to be seen how the U.S. president can help American automakers to sell more vehicles here when consumers are clearly turned off by their style and quality.
``To put it bluntly, U.S. cars are just too big for the roads here,’’ said Suh Sung-moon, an analyst at Korea Investment and Securities, who argues that the Americans are now paying for their lopsided production strategy in favor of big cars, trucks and sport-utility vehicles (SUVs) since the 1990s.
``Bigger engines mean bad fuel efficiency and it’s hard to call their designs cutting edge or neat. How can you expect Korean drivers to embrace U.S. cars when don’t even sell well in their own country?’’ he said.
Japanese cars now account for more than 40 percent of all vehicles sold in the U.S. with Japanese carmakers operating more than 20 assembly plants there.
The reputation of being big, unfashionable and inefficient is a hard perception to shake for U.S. carmakers here. Chrysler, the best American performer in Korea, has so far sold more than 5,000 of its 300C luxury sedans, but even Ahn Young-seok, the country manager of Chrysler Korea, recently admitted that it is critical for American carmakers to shed their gas-guzzling image to have a stronger market position.
Chrysler spokeswoman Lena Park said a diversified lineup, which included the mid-sized Sebring sedan, was behind the company’s moderate success.
There are no U.S. cars among the 10 most popular foreign car models offered by Kumho Rent-A-Car, one of the country’s biggest car rental companies, according to the company’s marketing manager Kwak Yu-jin.
Five Japanese models were included in the top 10, with the Honda Accord 3.5, Infiniti G35 and Lexus IS250 rounding out the top three.
``Korean drivers aren’t going for big and lavish, but prefer neat and slim-looking sedans,’’ she said.
thkim@koreatimes.co.kr
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