Korean trading with Europe: Imported cars
In Korea, imported vehicles were unwelcome by the reason of the domestic auto industry contraction, waste of foreign currency and a luxury trend could build incompatibility. But now their sale are up due to change of awareness and a rise in average earnings.
In 2012, its share broke the wall of 10% at the first time, so 1 in 10 nation people have an imported vehicle, finally it recorded 12.1% in last year.
The following table shows that the share of imported vehicles from Japan and the United States is lowering in the imported car's market, while European is showing a growth of market share. And the figure is expected to pass 80% in 2014.
Look at the top 10 foreign vehicle companies, you can see the European car companies swept the first four places (BMW, Mercedes Benz, Volkswagen, Audi).
So why do the Koreans have been buying and liking Europeans cars?
First, let's see from an economical point, we divided into three.
Individual consumption tax for imported car exceeding 2000cc is reduced by 7 to 6%, and according to the Korea-EU FTA, tariffs on cars is completely abolished by 1.6 % to 0% in July.
Also due to a fall in the exchange rate the price of imported cars has been more competitive, as "European gasoline vehicle quota" is being released, it can import a variety of automobiles, they would be able to accept more customer base. In the end these companies dominated domestic car market by a good diesel are being able to take a small gasoline car market.
Then why are European car is preferred on the consumer's perspective?
I think these are the following two points:
First is European car's safety and durability. Could you look at the pictures? A car collided with a bike is made in China, and the bike is a German mountain bike. Despite being bumped into the car, the bicycle has a pretty good maintain appearance.
In addition, the durability test conducted by “Autobild” (a German auto magazine) showed that 6 vehicles in ranking 1 to 10 are Europeans. So domestic consumers have been aware of the strong durability and excellent performance of the European cars and have a great effect on imported car preference.
Second is the image marketing. European car's luxury image is famous in Korea. Let's see an advertisement of Hyundai. It uses the phrase "complete new pattern of European semi medium." I think, this phrase shows that domestic car is also oriented European style and it has the ear of the consumer. In this situation recent event that cars released in the overseas is more superior to the performance than in the domestic market roused animosity of consumers, so it raised reduction of consumption.
This time, I will show you another advertisement of Benz. This video shows the braking time of Benz. Like that, European vehicles consolidated the stability and the luxurious image, and stimulated domestic consumers. In addition, BMW, Volkswagen and Porsche's histories that created a reliable product in World War II support their images of robustness. Also they check and promote each other indirectly through an ad at the same time, and it was to get a win-win effect.
For this reason, more and more domestic consumers prefer European car, and its buying rate is increased. But the right after-service center of European vehicles does not exist in the country. European automobile companies need to build Infra and to expand a reliable management system, and it's time to find the way for 'increasing of customer satisfaction' such as introduction of used car purchase program.
Our guest Mr. Thilo Halter:
Our guest Mr. Thilo Halter:
On May 14th Mr. Thilo Halter visited to our class and informs us about the German vehicle company ‘MAN’ and ‘European Chamber of Commerce’, where he works. I was so interested in, because our presentations were also about the European vehicles, which we showed before his lecture. And I was little bit curious about him, how could he get 2 jobs.
Actually I had just small knowledge about normal cars, for example, SUV, passenger cars. Therefore for me, it was taken bags of time to preparing about this theme. But while I prepared for many commercial vehicles, I could get much useful information and it was big help to understand Mr. Thilo Halter’s lecture. In fact, I am using often my dictionary application to understand the guest’s speech as much as possible.
His lecture leaded me to apply his company after I will have had bachelor degree. And if I were CEO one of the companies, I really want to buy just the commercial vehicles from MAN and let my employees work with their nice cars.
In contrast, his presentation about ‘European Chamber of Commerce and Industry’ attracted me not so much like the other. Because he mentioned with some professional words and showed us economical charts, that the students couldn’t easily understand, who don’t study business administration. But through free talking with him, professors and few fellow students during dinner after the class were of help to understand, which I couldn’t follow in class.
So Mr. Thilo Halter’s presentation has opened my eyes to other fields, which I was actually not interested in, and I hope also, such good presentations are continually held every semester.