Foreign carmakers eye stronger foothold

By Kim Tae-jong

Foreign car importers said Tuesday that they will step up efforts to strengthen their foothold here by upgrading after-sales customer services as they celebrated the 25th anniversary of advancing into the Korean market.

“The imported car industry will do its best to upgrade after-sales customer services in order to enhance customer satisfaction, not just taking the current growth for granted,” said Jung Jae-hee, chairman of the Korea Automobile Imports & Distributors Association (KAIDA), during a news conference at the Westin Chosun Hotel in Seoul.

Jung, who also serves as CEO of Ford Korea, said foreign car importers will strengthen their corporate social responsibility (CSR) activities to show their strong commitment to the Korean market.

The remarks come 25 years after foreign cars were first officially allowed to be imported here and it is expected to be the first year for imported brands to sell over 120,000 cars. This means their market share will top 10 percent.

It marks huge growth, compared to the first year when only 10 vehicles were sold by Mercedes-Benz, the first imported carmaker allowed here. Eleven brands entered in 1988 and it took 10 years until 10,000 foreign cars were sold here in 1996.

But they had to fight against government regulations designed to protect locally-manufactured cars and overcome prejudice against imports, especially during the 1997-98 financial crisis when owning a foreign car became a target of public anger.

There are now 25 foreign brands imported by 16 local affiliates which sell some 350 models. About 60 new cars are introduced every year.

One of the notable changes in the industry over the past 25 years includes the increasing number of younger customers in their 30s making up the largest portion of buyers.

Foreign car importers have also introduced a wider variety of cars in different segments here to meet new demand. The average price of imported cars decreased to 63 million won from 77 million won in 2003 indicating a wider range of models with varying price tags.

In this regard, the free trade agreements (FTA) between Korea and the European Union and the United States have served positive roles in expanding the presence of foreign vehicles.

Car importers also plan to engage in more aggressive marketing to compete with each other as well as local brands.

But there are some concerns over the recent fast growth of the foreign car industry.

Many drivers worry about the high maintenance costs and inconvenience in after-sales services when they consider buying an imported car.

According to recent research by the Korea Consumer Agency (KCA), the number of service centers for imported car brands is too low.

The KCA found the number of cars per repair center is highest for Mercedes-Benz at 3,672, followed by BMW (3,306), Volkswagen (2,677), Honda (2,625), Audi (2,589), Lexus (2,519) and Toyota (1,794).

Regarding such criticism, Thomas Urbach, vice-chairman of KAIDA and CEO of Mercedes-Benz said foreign car importers have invested a huge amount of money in building new facilities and educating staff and dealers to tackle precise problems and they will work to provide customers with better services.

Yoon Dae-sung, executive managing director of KAIDA also said they will also improve other conditions that are unfavorable for imported car owners such as high insurance rates.

He also mentioned that they have been conducting research on the used car market for imported cars so that drivers can trade imported cars at reasonable and reliable prices.