Domestic carmakers reclaiming clout

/ Yonhap

By Lee Hyo-sik

The tide has turned in favor of Hyundai Motor and other domestic carmakers as foreign brands are bearing the brunt of the escalating Volkswagen emission-cheating scandal.

The country’s five carmakers -- Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motor and Ssangyong Motors -- saw their sales jump by double digits in September on the launch of new models and lower consumption taxes levied on automobiles.

Analysts say that sales of locally produced vehicles will continue to pick up in coming months as more consumers shun Volkswagen and other imported car brands amid concerns over the reliability of foreign vehicles.

Even before the German automaker admitted on Sept. 18 to installing a controversial software program in nearly 11 million diesel-engine cars worldwide, the sales of imported vehicles here had been declining in recent months.

In September, the five domestic carmakers sold a combined 128,067 cars in the highly competitive local market, up 15.7 percent from a year earlier.

Hyundai sold 51,954 cars last month, up 8.7 percent, while motorists bought 45,010 from Kia, up 16.6 percent. GM Korea and Renault Samsung saw their domestic sales jump 24 percent and 10.9 percent, respectively. The sales of Ssangyong vehicles soared 59.1 percent to 8,016.

“Automakers operating plants here will continue to enjoy brisk sales in the fourth quarter of the year, thanks to the growing popularity of newly released models and lower consumption taxes,” said Park Young-ho, an analyst at KDB Daewoo Securities. “In the past, they used to suffer sales declines here as more consumers flocked to imported car brands. But I think they are poised to regain market share in the coming months.”

Park said the ongoing emission-cheating controversy involving Volkswagen has tarnished the image of German and other foreign carmakers here.

“Consumers have shown signs of turning away from Volkswagen and other imported car brands,” the analyst said. “This will certainly benefit Hyundai and other domestic local makers. Foreign brands will likely lose more customers.”

According to the Korea Automobile Importers & Distributors Association, Volkswagen and other foreign brands sold a combined 18,200 cars in August, down from 20,707 in July and 24,275 in June. Their combined market share also fell to 14.96 percent in August from 15.74 percent and 18.06 percent.

The association expects sales dipped further in September, expressing concerns that the annual sales figure may not reach 240,000 for 2015.

Of the foreign-brand cars brought into the country in the first eight months of the year, German automakers accounted for 69.2 percent, with Japanese brands taking up 11.6 percent. Volkswagen and Audi sold a combined 19,158 cars from January to August, accounting for 28.2 percent of the imported car market.

“Given Volkswagen’s considerable market share, the ongoing emission cheating scandal has poured cold water on the sales of imported car brands,” Park said. “However, this presents good opportunities for Hyundai and Kia to regain their domestic market shares, and raise their profiles in the United States and other overseas markets.”