Brand is important to South Koreans, as is loyalty. This explains why only 7% of cars sold here are imports – and why Renault will keep using the Samsung name for as long as it can.
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“Samsung has a very strong brand image and is a big plus for us,” said Jean-Marie Hurtiger, CEO of Renault Samsung Motors. “We would lose market share if we stopped using the name so we’ll keep using it.”
An original agreement to use the name was due to run out in 2012; that was renewed earlier this year and now Renault can keep branding its cars in this market as Samsungs until 2020.
Samsung owns 19.9% of RSM with Renault owning the balance. And while awareness of the Renault brand is growing in this fiercely patriotic country, it will be a long haul to establish it at a level where it is instantly recognisable as the name of a maker of quality cars.
This helps explain why big foreign brands such as Wal-Mart and Carrefour have failed but Tesco, by linking up with Samsung, is having more success, said Hurtiger.
The halo effect of the Samsung brand is one that RSM is keen to build on and a good result for Renault at next month’s first Korean Grand Prix will also help.
Hurtiger said that four to five years ago Renault was seen as an investor in Samsung Motors, now it’s getting known better as a car maker. Renault technology is being introduced into communications and where it was just Samsung Motors, now the company is called Renault Samsung.
Even so business cards only have the ‘eye of the typhoon’ Samsung Motors logo and the more familiar (as in electronics) Samsung emblem – not a hint of the Renault diamond.
The concept of branding and status makes the South Korean market a challenging one. As in neighbouring China, people like big cars and even the SM7, RSM’s largest car, isn’t big enough to satisfy the status for chairmen and chief executives. The only A segment cars sold here are the Kia Morning and GM Daewoo Matiz. Hyundai’s A segment i10, built in India, is shipped west to Europe but not east to the home country because there’s no market for it.
But observers here believe that might change with the emergence of a new generation of more eco-thinking and less status-conscience buyers, although that could be wishful thinking on behalf of a minority.
One way in which this status obsession works well for Korea’s domestic car makers is that there is little danger of a flood of Chinese-built cars, said Hurtiger. The simple reason is that Chinese cars are cheap and Koreans don’t do cheap.
Samsung has an enviable reputation for quality and customer service which helps explain the strength of the brand. That same reputation carries over to the cars and, for the past eight years, the company has topped both customer satisfaction surveys and independent quality audits which place them ahead of Hyundai. Hurtiger thinks this year will be the ninth time they will come top.
Look at this another way: the record means that RSM hit the No.1 quality spot just three years after building its first Nissan-based cars and has managed to continue as it switched to Renault-based vehicles in 2009 with the launch of the new SM3 and at the beginning of this year with new SM5 which made its debut as the Renault Latitude at last month’s Moscow motor show.
RSM positions itself as the ‘challenger’ brand here – challenging the 70% market share of Hyundai-Kia; this is how Nissan has positioned itself in Europe for several years and while cynics might dismiss the idea as marketing nonsense, it makes sense when you talk to Frederic Artaud, executive managine director for marketing at RSM. “It’s very important for us to leverage the Samsung brand,” he said.
The SM3, launched at the end of last year, was co-marketed with Samsung Electronics; the launch slogan was ‘different premium’.
“We charge slightly more than Hyundai and Kia do, but our three-year residual value is 69% against their 58.9%. Customer appreciate and understand that,” he said.
The RSM brand slogan is ‘Discover the difference’ and it appears to be working. SM3 is selling at 6,900 a month (the old SM3 sold 5,000 a month) and SM5 is attracting 6,900 buyers a month. And both with considerably younger age profiles than in Europe – SM3 buyers are under 30 and SM5 buyers under 40.
Alejandro Mesonero, RSM design chief, is clear that part of his brief is to contribute towards the company’s brand identity values which he lists as refined, dynamic and precise.
“We need to add the right elements to clearly express the brand – like mixing the ingredients in a cocktail so that it tastes just right,” he said.
And if anyone is in any doubt of how demanding – and discerning – Koreans are, he points out that other global industries such as cosmetics and electronics use them as a test bed. “They are hungry for new things so even European companies will launch new products here to see how they go before launching them in Europe.”
See also: ANALYSIS: Big, bold and blinged-up. It’s boom time again for Korea’s car market
