Sales of imported cars in South Korea are expected to grow around 30 percent next year, helped by the release of various entry-level models, the head of SK Networks Co's grey import car business said on Monday.
Imported cars sales would reach 65,000 units next year from this year's estimated 50,000, said Kim Jun, executive managing director at S-Movilion of SK Networks, the first among South Korea's conglomerates to begin a parallel car import business.
"Foreign car makers will bring many new entry-level models next year and that will lift sales by around 30 percent," Kim said in an interview with Reuters, adding that his company aims to sell 2,500 cars in 2008.
Mercedes-Benz of Daimler AG recently launched the new C-Class models, its entry-level sedans in South Korea, and BMW is considering selling the 1-series next year.
S-Movilion began on November 22 to sell foreign cars such as Lexus on the grey market, which imports cars from dealers instead of manufacturers and sells them below the official dealer prices. It opened for business before the country's top Hyundai Motor Co will introduce its premium model Genesis on January 8, which is designed to compete directly with luxury imports.
Imported car sales have a modest market share of around 5 percent in South Korea, but they are eating into profits of domestic makers of high-end models such as Hyundai and affiliate Kia Motors Corp. Also, import sales are rising quickly, up 32 percent 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.
PRICE WAR: 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 said.
S-Movilion offers foreign luxury models with the removal of some options at prices that are as much as 17 percent less than those charged by official dealers, Kim said. The number of grey import cars, which account for about 16.5 percent of the country's imported car market, has jumped 44.5 percent during the first 10 months of 2007 from a year earlier, according to 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 said. "We will see a domino effect in prices of imported premium cars. Even before we launched the business, the dealers cut prices," he said.
The company, which already has official dealerships for other models including Nissan Motor Co's Infiniti and Ford Motor Co's Jaguar, plans to add another official dealership for Nissan in October next year. It plans to sell the Murano sport utility vehicle (SUV) and eventually introduce about 10 models, including the Altima sedan, Kim said.
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