According to the Korea Automobile Manufacturers Association the free trade agreements between Korea and the US hurt Kia and Hyundai domestic sales.
In Europe, Kia and Hyundai are expected to reach a 2012 growth of 14%, and 12% in the US, while in Korea, sales have dropped 5.2% this year. If in 2002 South Korean manufacturers held 99% of the market, the percentage has dropped to 92% in 2011, according to the Korea Automobile Importers & Distributors Association.
“The recent rise of imports definitely threatens Hyundai and Kia at home,” said Lee Sang Hyun, an analyst at NH Investment & Securities Co.
So far this year imports have increased 24%, accounting for 10% of the market and are expected to reach 15%. Foreign automakers are attracted by the increasing economy in South Korea which is forecast to surpass Asian peers. German automakers lead the imports market with 65%. Audi’s sales in South Korea increased 44%, BMW’s 21% and VW saw an increase of 42%. Japanese automakers’ sales were up 24% and the US brands rose 17%.
“I think imported cars look good and are more reliable, especially the German brands,” said 56-year-old Yoo Myung Sook, a homemaker who lives in Gangnam and is looking to trade in her Kia Opirus for a Mercedes. “You can see a lot of imported cars on the streets these days. Everyone in Gangnam seems to be driving one.”