The only new car by Korea's five domestic carmakers to be unveiled in the second half of this year is the Kia K3, a follow-up model to the Forte compact, but their foreign rivals are rolling out more than 30 new models.
Foreign carmakers are expected to consolidate their footing in the Korean market further with greater price competitiveness courtesy of Korea's free trade agreements. Imported cars accounted for 9.9 percent of Korea's car market in the first five months of this year and look set to surpass 10 percent for the first time by the end of this year.
◆ New Models
The country's 22 car importers rolled out 50 models in the first half of this year including face-lifted versions and plan to unveil at least 32 more in the second half, including 10 all-new models. That marks a 10 percent rise from last year, which already saw the largest number of new foreign cars being unveiled.
Among the new imported models are mid-sized sedans like the Volkswagen Passat, Ford Fusion, Nissan Altima, Honda Accord and Lexus ES series. Also, the Toyota Venza cross-over utility vehicle and BMW 6 Series Gran Coupe have no rivals in Korea and are expected to create new demand.
Korean carmakers rolled out around six new models in the first half including the Kia K9 large sedan, Hyundai Santa Fe and Ssangyong Rexton W SUV but have no more new cars lined up apart from the K3.
Kia also plans to release partially face-lifted versions of the K7 sedan and Sorento R SUV, while Renault Samsung is rolling out a slightly modified version of the SM3 compact and SM5 mid-sized passenger cars, but they are not expected to create the same buzz as an entirely new vehicle.
"Last year, Hyundai and Kia rolled out a large number of new models at once, including the Grandeur, Morning, Ray, i30 and i40 and there is no capacity left this year," said a Hyundai Motor staffer. "It won't be until next year that a new car such as the new Genesis will be ready to be unveiled."
◆ Intensifying Competition
Foreign carmakers are not only armed with a wide range of new models but are also at an advantage in terms of product quality and price competitiveness. Ford, whose cars used to have a reputation as gas guzzlers, shifted the engine of its mid-sized Fusion from a 2.5 liter one to 1.6 and 2 liter versions that offer the same horsepower but 17 percent higher fuel efficiency. The Fusion is expected to be priced in the competitive W20 million (US$1=W1,157) range due to tariff exemptions under the Korea-U.S. FTA.
German and Japanese carmakers are also bringing in mid-sized vehicles made in the U.S. to benefit from the bilateral FTA. The U.S. version of the Volkswagen Passat features 10 cm larger interior space than the European model to compete with the Hyundai Sonata and Toyota Camry there. Volkswagen Korea decided the U.S. version would be more appealing to Korean customers who also prefer large interiors. The German carmaker also lowered the price tag from some W45 million to less than W40 million to compete with the Hyundai Grandeur.
Nissan and Honda are also brining in models manufactured and sold in the U.S. to gain a price edge. German luxury carmakers BMW, Mercedes-Benz and Audi are set to unveil their latest high-performance cars to strengthen their foothold in the high-end car segment.
"Until recently, Korean and imported cars competed in the W40 million to W50 million premium car segment, but from the second half of this year the battleground will expand to more affordable models like the Grandeur and Sonata," said Kim Pil-soo at Daelim College. "While domestic automakers are busy defending their turf, imported cars are expected to intensify their offensive."