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A model poses with Hyundai's new Grandeur sedan at the 2005 Seoul Motor Show. Hyundai, South Korea's largest automaker, will launch the Grandeur sedan in the United States later this year as the next Azera.S. Korea's more open market sparks luxury vehicle battle
As imports grab more sales, Hyundai and Daewoo launch premium offerings.
GM Daewoo will introduce the rear-wheel-drive Statesman for the Korean market. The sedan features a roomy interior.
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SEOUL -- For years, U.S. and European automakers complained that the South Korean auto market was closed to outsiders. Korean automakers routinely targeted foreign markets with inexpensive exports, while imports still account for less than 1 percent of South Korea's car market.
Now that South Korea has abandoned some of its protectionist business practices, more foreign automakers are targeting Asia's third-biggest market. But while Honda, Nissan, Volkswagen and Toyota have entered or devoted more resources to the South Korean marketplace, it's been the introduction of BMW, Mercedes and other luxury brands that have prompted South Korea's Hyundai and Daewoo to take notice.
South Korean automakers are launching premium cars aimed at stemming a sharp increase in sales of imported premium models.
In the lucrative segment for luxury cars priced $50,000 and upward, foreign brands have grabbed more than half the market since South Korea relaxed protectionist trade practices a couple of years ago. Now, foreign carmakers are introducing entry-level premium models, such as BMW AG's Mini cars, and the Audi A3, to take a bigger slice of the South Korean market.
Led by BMW, Mercedes and Lexus, South Korean auto imports rose 18 percent last year to 22,885 units, according to Global Insight.
It's a small showing but still worrisome to Korean automakers.
"After the market opened, we knew that the share of imported cars would inevitably grow," said Jae Il Kim, senior executive vice president of Hyundai Motor, South Korea's largest automaker. "But we're not sitting here watching them grow. We've developed luxury cars and have many in the pipeline."
At the Seoul Motor Show this week, Hyundai introduced the new Grandeur sedan. It will be launched in the United States later this year as the next Azera and boasts a more refined interior and better ride.
Hyundai executives say they may also develop a top-end car, priced above $70,000. Hyundai's current flagship sedan, the Equus, carries a top price of $70,000.
With a bigger luxury model, Hyundai would be able to compete directly against the new leaders in the luxury segment, Toyota Motor Corp.'s Lexus brand, BMW, DaimlerChrysler AG's Mercedes-Benz and Volkswagen AG's Audi nameplate.
General Motors Corp.'s GM Daewoo unit is launching a new flagship model, the Statesman sedan, for the Korean market. The Statesman, based on Australia's most popular large car from GM's Holden unit, "combines the styling, features and handling of an imported luxury car with the competitive price and extensive after sales network that only a domestic brand such as Daewoo can offer," said Nick Reilly, president and CEO of GM Daewoo.
"The Statesman is an excellent demonstration of how GM Daewoo is leveraging the global resources of GM to bring new products to the market faster," Reilly said. The rear-wheel-drive sedan features a cushy, roomy interior as well as a powerful, lightweight 3.6 liter aluminum engine.
Ssangyong Motor, one of South Korea's smaller automakers, plans a New Chairman sedan, as well as a stretch version, the New Chairman limousine, with reclining rear seats, mounted video screens and a minibar. And Renault Samsung Motors is displaying a flagship SM7 and new SM5 sedans.
The car show, held in the new Korea International Exhibition Center, features domestic and foreign brands. In previous years, South Korean and foreign automakers displayed their latest models at separate events, reflecting tensions between importers and Korean automakers.
Although South Korea did not impose heavy duties on imported cars, the market was impenetrable. Foreign companies could not compete against low-cost Korean automakers in small and midsize cars, and the government resorted to unusual tactics, such as auditing buyers of foreign cars, to squelch demand for luxury imports. Until a couple of years ago, Japanese car imports were effectively banned.
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The Detroit News.
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