By Kim Tae-gyu
Staff Reporter
In the past Korea has earned the wrath of trading partners for exporting cars en masse, while its market was virtually closed to foreign models.
Now, that stereotype is about to change, with some foreign models selling so well that the importers are having a hard time meeting orders. Despite a global slump, Korea has showed a remarkable growth in terms of foreign automobile sales.
The Korea Automobile Importers and Distributors Association (KAIDA) said Sunday that the registration of foreign models reached a record monthly high of 7.208 in April, up by 51.1 percent year-on-year.
During the first four months of 2010, the figure amounted to 27,215, up 60.5 percent from the corresponding period last year, boosted by strong sales of such brands as BMW, Volkswagen, Toyota and Ford.
The KAIDA predicts that foreign brands combined will sell 74,000 vehicles this year for a 21.3-percent yearly growth. But they are currently on a pace to chalk up sales of more than 80,000.
``The market for imported models expanded by 20 or 30 percent ever year in the mid 2000s. The exponential growth was curbed last year due to the global financial crisis but it has gotten back on track as the economy stabilized,'' KAIDA spokeswoman Park Eun-seok said.
Yet, the buying spree seems to be more than just the resumption of the long-term fad toward high-end overseas products ― demand is outstripping supply for some brands including Ford and BMW.
Most folks who wanted to snap up the 2010 version of the Ford Taurus could not get one here because of the long queue of buyers. About 1,200 signed a contract to buy the sedan but Ford Korea struggled to secure enough vehicles.
The Seoul-based outfit managed to meet the high demand last month when 456 of the new Taurus armed with advanced features and innovative design were sold to become the second best-selling imported model.
BMW Korea also fails to supply sufficient volume to meet the strong demand for its 5 series like the 523i or 528i. For example, more than 3,000 people lined up to buy the 523i but BMW Korea could only supply 200 cars last month.
It is a similar story for the Toyota Camry or the Volkswagen Golf TDI.
Observers point out that the narrowing price gap between local products and imported ones underpins the brisk performance of the latter.
``Prices of domestic vehicles have substantially appreciated during the past years in line with improving quality and brand power. In comparison, those of foreign ones decreased to cut down on the difference between the two,'' a Seoul analyst said.
``Hence, Koreans now have few reasons to stick to cars of Hyundai Motor or Kia Motors. They tend to buy whatever models, which attract them in terms of price or quality and such aspects will only strengthen further down the road.''
Hyundai Motor and Kia Motors, the flagship affiliates of the Hyundai-Kia Automotive Group, is the world's No. 6 automaker and have reigned as the perennial business leader in the local market.
Some point their fingers to rich people for the unexpectedly solid performances of expensive foreign carmakers.
``A majority of demand for luxury foreign sedans comes from corporate clients, which hope to show off their high status and financial leeway via operating luxury vehicles,'' Woori Investment & Securities analyst Michael Sohn said.
``The point is that they purchase the expensive items for the very reason that they are expensive. They want to distinguish themselves from ordinary consumers by buying them or the classic case of the so-called Veblen effect''
Named after U.S. economist Thorstein Veblen, the effect refers to mysterious market behavior where end users prefer higher-priced products even though much cheaper substitutes are available.