South Korea’s Auto Tiger Pounces

http://www.motociti.com/blog/?p=159

A Chinese proverb says “there is chaos under heaven, the situation is excellent”. That may be exactly the situation for Korean automobile manufacturers. The tsunami that hit Japan disrupted the supply chain for auto parts, and caused some problems that were not planned for in the Japanese auto industry. This resulted in an inability to get Japanese products to market quickly, and when coupled with other events it appears that the Koreans received a major opportunity among consumers looking to buy affordable cars which was definitely exploited.

A development that is quite alarming for the Japanese is the erosion of consumer support for Japanese automobiles among young American car buyers. It dropped nearly 10 percentage points in the last four years, while market share for Hyundai and Kia jumped to a combined 12.6% market share of young buyers in the 2008 – 2012, and to 10.1% among those looking to buy a car in the 25 – 34 age bracket. These figures are obviously disturbing to the Japanese who may have thought that the American market was safe territory for them as far as any possible Asian competitor. If left unanswered, the Korean demographic market share can expand into older brackets while maintaining a clear advantage in the younger ones. The decline can also hit other markets, including Nigerian auto sales. The Japanese have every reason to be concerned.

Granted, part of success is that the Korean offerings are primarily cheap cars for sale. However, there’s been a noticeable change in quality both in design and perception of the public and the car dealers. Higher-quality is one of the reasons why overseas sales of the best selling cars surged in January 2013, with expansion of approximately 24.8% from the year before. Hyundai motor saw an increase of 11.1% in sales and GM registered global sales that increased 24.7% in the 12 month cycle. SsangYong Motor scores the biggest hit with an increase of 43.9% in sales in January. Even the most skeptical analyst would conclude that these were very enviable increases.

Korean car companies are moving quickly to keep this momentum going. Those Americans who are keen on the environment will be taken a close look at the 2013 Hyundai Sonata Hybrid, which has a 35 kW electric motor and a 47 kW Lithium Polymer battery pack. The Kia Optima for 2013 is a midsized sedan with a powerful four-cylinder engine and has features such as Bluetooth, satellite radio, and the Kia Uvo infotainment system. The Korean car manufacturers are obviously trying to stay with state-of-the-art technology innovation, and if this results in Korean cars being more of an accessory to a smart phone then additional sales surges should occur in the near future.

It has to be remembered that conditions were fairly opportune for Korean cars to gobble up so much of the market. Yet, the increased interest in the Korean models by American consumers took place over a period of years and brand loyalty may be rapidly developing in United States. This interest is also being replicated in Nigeria. Japan will eventually shake off its bad luck and be a serious competitor in automobile sales. When that happens Japan will find that its neighbor to the northwest has become a very serious threat to the market share the Japanese auto industry once owned almost uncontested.

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