Posted : 2010-07-08 19:02
Updated : 2010-07-08 19:02

Volkswagen man raps Korean carmakers’ low-pricing policy

Carl Hahn
Volkswagen honorary chairman
By Kim Da-ye
Staff reporter

Carl Hahn, honorary chairman of the Volkswagen Group, Thursday said aggressive pricing policies pursued by Korean car manufacturers in the global car market won't be feasible in the long run and good design and quality should be the keys to advancing to the next level in a carmaker's evolution process.

The legendary business figure, who made the Volkswagen Golf a European favorite, said, "It is a matter of evolution. When you're a new comer in the market, you usually have to be a little modest. You buy a market share with low prices. But then, of course, you will face a job ― to get out of this trap as you won't be competitive due to not having enough money per car you make.''

Hahn continued, "Korea is in a position to have an aggressive price policy, which obviously won't be possible in the long run.'' Dressed in a perfectly-cut black suit and a red tie, sipping espresso the automobile chairman commented, "Volkswagen is like espresso. It is available everywhere."

Korea exported 261,725 cars in June ― up 10.7 percent from the previous month and a year-on-year 45.7 percent increase, according to the figures released by the Korea Automobile Manufacturers Association. Low prices are often cited as the main reason foreign buyers choose Korean cars, although there are increasing indications that their quality has improved remarkably.

Being rather careful when making any specific suggestions for Korean car manufacturers, Hahn said, "I think they know what will take them to the next level ― design and better quality. Happiness of consumers who bought your products decides the foundation on which your future can be determined."

Asked if Korean car manufacturers will be up to compete with Volkswagen Group whose subsidiaries include Audi, Lamborghini, Bentley and Bugatti, Hahn indirectly came back to the pricing issue, "Naturally, when somebody is undercutting your prices, he is your competitor. But people expect that when they buy a Volkswagen, they get an overall value, which lasts not only during the lifetime of the car, but even when the car is scrapped."

Hahn said the most unique feature of Volkswagen vehicles is the high resale value, which he says is supported by "very high investments" by the auto giant's dealers.
"Service in terms of trained mechanics, excellent service facilities and supply of spare parts should be put together so that your car's maintenance is assured. We always emphasized that, when we were starting in the U.S. in the 1950's."

With quality cars and maintenance services, it will be consumers who come to the car maker without the price being a priority. "We have the same problem today in Korea. We do not have enough cars to meet demand, which I consider a nice problem," said Hahn. "It is a great compliment that you do not have to discount your cars or price them away, but you offer a value that people are ready to accept."

Hahn, who spearheaded Volkswagen's famous advertisements in the U.S. during the 1950s and '60s, also talked of the importance of branding and advertizing. "When I came to the U.S. in 1959, Volkswagen never spent a single dollar in advertising. By finding the agency, Doyle Dane Bernbach, we created the best advertising campaign of the 20th century as Advertising Age nominated us," he reminisced. "The advertisement was in a new style with clear messages ― a picture, a headline and very good copy, if possible, full of humor. Using this opportunity globally, we could then have uniformity not only in our products, but also in our language, our message."

Throughout the interview, Hahn expressed how he marveled at the rapid growth of the Korean economy. "When I came here for the first time 30 years ago, it was a different country. You were at the beginning of the success. It is clearly visible Korea moved in a very good direction ― concentrating on certain industries like ship building and electronics."
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