Sales of imported cars in South Korea are expected to grow around 30% next year, helped by the release of various entry-level models, the head of SK Networks grey import car business told a news agency on Monday.
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Imported cars sales would reach 65,000 units next year from this year’s estimated 50,000, Kim Jun, executive managing director at SK Networks’ S-Movilion, the first among South Korea’s conglomerates to begin a parallel car import business, told Reuters.
“Foreign car makers will bring many new entry-level models next year and that will lift sales by around 30%,” Kim said in an interview with the news agency, adding that his company aims to sell 2,500 cars in 2008.
Mercedes-Benz recently launched the new C-Class entry-level sedans in South Korea and BMW is considering selling the 1-series next year.
S-Movilion began on 22 November to sell foreign cars such as Lexus on the grey market, which imports cars from [foreign] dealers instead of manufacturers and sells them below the official [local] dealer prices.
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By GlobalDataIt opened for business before Hyundai Motor introduces its premium Genesis model on 8 January, designed to compete directly with luxury imports.
Reuters noted that imported car sales have a modest market share of around 5% in South Korea, but they are eating into profits of domestic makers of high-end models such as Hyundai and affiliate Kia Motors.
Also, import sales are rising quickly, up 32% in the first 11 months of the year from the year-earlier period, as faster growth in the country’s domestic demand has caused customers to look for more expensive and stylish foreign cars, the report said.
South Korea’s grey import car market is also growing quickly as more customers seek out foreign cars at cheaper prices.
“Why should we pay double for the same car here than in the US or Japan? We see a big bubble in car prices, maintenance and financing,” Kim told Reuters.
S-Movilion offers foreign luxury models without some options at prices that are as much as 17% less than those charged by official dealers, Kim said.
The number of grey import cars, which account for about 16.5% of the country’s imported car market, has jumped 44.5% during the first 10 months of 2007 from a year earlier, Reuters noted, citing data from the customs office.
That caused foreign car makers to cut their prices, and SK Networks’ grey import business will cause prices to fall further, Kim told the news agency.
“We will see a domino effect in prices of imported premium cars. Even before we launched the business, the dealers cut prices,” he said.
Reuters noted that the company also has official dealerships for Infiniti and Jaguar.
