SOUTH KOREA: EU-Korea FTA opens supplier opportunities
A new free trade agreement between the EU and South Korea will open up new opportunities for European suppliers.
The agreement will eliminate import duties making European suppliers more cost competitive overnight.
Due to come into effect from next July, the agreement will also give allow Korean car companies larger margins to play in Europe.
Jay Cooney, vice president, corporate affairs at GM-Daewoo Automotive Technologies, said: “When it comes to quality, European suppliers have always been the world’s best, but they have not been able to compete on price in Korea.
“This will change everything.”
Cooney added that more free trade agreements between countries and regions will also help harmonise standards and safety and environmental issues allowing for a significant reduction in homologation costs.
In Korea, Cooney acknowledged that GMT-DAT still faces a mountain to climb chasing down domestic rivals Hyundai and Kia who have a total market share in Korea of 82%.
“We have just 8% at the moment and we have a balancing act to perform in terms of marketing.”
That balancing act is choosing between the Daewoo and Chevrolet names in Korea.
He added: “On one hand, the Daewoo name is damaged goods because the old company went bankrupt. In the eyes of Koreans that is a serious case of losing face and a kick in the teeth to the loyal workforce.
This is demonstrated by the fact that some Koreans buy Chevrolet badges to put on their Daewoo cars.
“On the other side, there are still some Koreans who want the name to remain as a reminder of one of the great chaebols. But we will start to introduce the Chevy brand on new Korean-built products gradually.
“There is a good acceptance of American products in Korea.”
While Hyundai and Kia are well ahead in terms of market share, the brand GM-DAT is benchmarking for customer service is Renault Samsung – starting with the showrooms.
Cooney said: “If you use hotels as a comparison, Renault Samsung dealerships are like Intercontinental verging on Ritz Carlton, they place a lot of emphasis on making the customer welcome and also making them want to come back.
“The service is also based on Samsung’s overall reputation. It doesn’t matter if it’s a fridge, a dishwasher, a mobile phone or a car. I had a problem with my Samsung dishwasher and an engineer was on the doorstep within an hour.”
GM-DAT has already started to up its game in Korea with the launch of its new Alpheon mid-size luxury car based on the Vauxhall Insignia/Buick LaCrosse platform.
Cooney said that every customer for this car in Korea gets a home visit from their dealer to make sure everything is satisfactory and to explain all the workings of the car.
“In Asia service is expected and we are looking at more ways in which we can improve starting with a mild facelift for all our dealers to make them more hospitable. We want people to come into the dealerships and enjoy the whole customer experience."