In 2010, Subaru arrived in the Korean market, and when the Korea-EU FTA went into effect on July 1, 2011, the import car market was reinvigorated, with more than 100,000 import cars sold in one year, a first in Korea. In March 2012 the Korea-US FTA went into effect, and the market began to grow at an accelerated pace, with over 130,000 cars sold in one year. As a result, import cars accounted for over 10% of the domestic passenger car market for the first time, laying the foundation for the popularization of import cars. Meanwhile, Hanbul Motors began to sell Citroen, and sales of Mitsubishi, which was suspended for a period, resumed with the CXC. In 2013, Fiat was re-launched in Korea, further reinforcing brand diversity in the Korean market.
Five import Commercial Vehicle brands (Iveco/MAN/Mercedes-Benz/Scania/Volvo Trucks) joined KAIDA in 2016 and started activity as KAIDA member.
The growth rate of imported car sales has reached 100% with various new models and makers in the market. Mercedes-Benz established its corporation in Korea in 2002. Peugeot, with Hanbul Motors as its official importer, has reappeared in the local market, which was previously distributed by Dongbu which withdrew from the market in 1998. The imported car market is experiencing radical changes with a market high selling record.
Having overcome the so-called IMF crisis, the imported car market is recovering in earnest since 2001, starting to sell more cars. Diverse brands debuted in the domestic market and local affiliates were established. Going through the quantitative and qualitative expansion, the imported car industry solidified the foundation for a takeoff in the market. The industry’s share of the market used to be less than 1% until 2001. In 2002, 16,119 imported cars were sold, accounting for 1.3% of the market, rising above the 1% mark for the first time in history. Since then the imported car industry has continued to break the sales record year
In 2003 the industry sold 19,481 cars, 23,345 cars in 2004, 30,901 cars in 2005, 40,530 cars in 2006, and 53,390 cars in 2007. It has continued to grow in a big way each year. In 2008 the imported car industry sold 61,648 cars, accounting for 6% of the domestic passenger car market for the first time.
There was stronger trading pressure on domestic automobile market as the car sales exceeded one million vehicles. After all, customs duties were reduced to 8% in January, 1995 and the acquisition tax for a passenger car of 70,000,000 won came to be decreased from 15% to 2%. In September of that year, even the special consumption tax and the auto tax were reduced due to the execution of automobile agreement between Korea and America.
Furthermore, restrictions on sales agents and advertisement time were also abolished. Like this, in the industry of imported cars, the sales had radically increased thanks to the full-scale marketing activity. The sales of imported cars, which were only less than 2,000 vehicles by 1993, enjoyed the best days as they sold 2,865 vehicles in 1994, 6,921 vehicles in 1995 and 10,315 vehicles in 1996. However, in the wave of IMF, the sales of imported cars decreased largely from 8,136 vehicles in 1997 to 2,075 in 1998 to be in serious adversity. In 1999, the sales increased to 2,401 by 15.7% than that of the preceding year but the market share of imported cars against the sales of domestic passenger cars was only 0.3%.
In the meanwhile, as the market size for the domestic imported cars became larger, foreign makers went into the market themselves. Starting with BMW in 1995, Chrysler and Ford established corporations and GM also began the active marketing activity from 1999. VOLVO and SAAB were equipped with the direct sales system for passenger cars and in 2000, Toyota established corporation in Korea. Imported cars had a tough game in the view that they were deluxe luxurious goods during that time but still had their own outcome. First of all, imported cars gave an influence on changing the characteristics of domestic automobile market. Korea was the supplier’s market, in which the supply could not meet the demand as the motorization was accelerated until the end of 1980's. In a position of makers, they continued to be short of cars to sell. Makers concentrated more efforts on producing popular models than introducing new technologies.
While domestic makers had a simple aim to sell cars, importing companies supported various cultural and sports events and did the intimate marketing activities through the direct contacts with customers by diversifying events. Also the service shops of importing companies were small in size than those of domestic makers but they were relatively in large size comparing the sales, which made big differences in providing active after service. Consequently, it became the opportunity to change the understanding of customers and to make makers recognizing the importance of the importer's market.
Importing companies introduced much higher level of safety and convenient service as well as performance in comparison with home-manufactured automobiles, which had led a comfort life in a closed market. Coming into contact with those imported cars, consumers naturally developed their eyes for cars and came to desire much more from domestic vehicles, which became the stimulus for domestic makers to develop technologies. In fact before imported cars were introduced, there were no significant fruits in innovative safety equipment such as ABS or air-bag. At that time, the safety mechanism of home-made vehicle remained in the level of the safety device to absorb shocks, safety belt and shock- absorbing bumper. However it was changed into the situation that ABS and air-bag are provided for compact cars as an option recently.
Needless to say, these changes were required as the competition became aggressive in the domestic market and for export trading but it is sure that imported cars played clear role in moving up them. That is, the good functions of imported cars in improving quality of home-made cars in general, should not be overlooked.
The imported car industry has arranged a market base to further develop the “2000 Korea Import Motor Show”. Toyota of Japan has entered the domestic market with the Lexus brand and Gojin Motor Import of Kukdong Oil & Chemicals was formally established as a domestic importer of Audi and Volkswagen, with the intention of revitalizing the imported car market.
And then in April next year, it opened the market on a full scale by releasing restrictions on displacement for all types of automobiles. As for atmosphere at that time, most people had negative views for the measures due to the contraction of the domestic automobile industry in the initial stage of growth, extravagance in foreign currency and production of a sense of incompatibility among classes resulted from the stream of excessive consumption and luxury.
Sales of imported cars were insignificant. The companies to launch the sale of imported cars in the first year of the opening included Hansung Motors Company(Benz), Hyosung Trading Company(AUDI/VOLKSWAGEN), Hanjin(VOLVO) and Kolon International Corp(BMW). and the sales were 10 vehicles only for Benz all together.
Entering into 1988, the sales increased to 263 vehicles as Dongbu(Peugeot), Doosan(SAAB), Kia(FORD), Keumho(Fiat) and Ssangyong(RENAULT) joined in the sale of imported cars. Furthermore customs duties of 50% were reduced gradually to be 20% in 1990. Although total sales were inconsiderable, the press focused on the sales increase rate to make it a social issue. That is, there were strong blames for preference for foreign goods and excessive consumption. However the companies to import cars were undergoing considerable difficulties in fact. That was because most of the increased sales were taken up by SABLE of Kia.
Starting the marketing from October, 1989, SABLE, which was the model imported in the original equipment manufacturing system(OEM) by Kia, showed the sales of 493 vehicles for three months and 1579 vehicles in 1990 to be nearly half of the total sales of other imported cars. People were more concerned about the fact the sales of imported cars increased than the blame that domestic manufacturers imported foreign cars to sell. After this, the imported car market had a tough game due to the tax inspection for owners of imported cars. Sales were only 1,735 vehicles in 1991, 1,817 vehicles in 1992 and 1,987 in 1993. In the meantime, some importing companies had to stop marketing as Ssangyong terminated the sales agreement with RENAULT and Doosan transferred the sales right of SAAB to Shinhan Motors Company.
It was gray importers that appeared while the importing companies were in difficulties. Gray importers meant importing companies without any direct exclusive import agreement with makers to import and sell automobiles from dealers of other countries. They played a role in opening the market by selling sports cars or vans, which were not imported by regular companies. However it was difficult to secure their position jostled by regular companies for A/S and quality guarantee.