In 2010, Subaru arrived in the Korean market, and when the Korea-EU FTA went into effect on July 1, 2011, the imported automobile market was reinvigorated, with more than 100,000 imported automobiles sold in one year, for the first time 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 motor vehicles sold in one year. As a result, imported automobiles accounted for over 10% of the domestic passenger car market for the first time, laying the foundation for the popularization of imported autobiles. Meanwhile, Hanbul Motors began selling Citroen, and the temporarily suspended Mitsubishi sales were resumed through CXC. In 2013, Fiat also re-entered the market, further enhancing the diversity of brands within the market.
In 2014, Porsche, which had been imported and sold by Stuttgart Sports Cars, established Porsche Korea.
In 2015, the annual sales exceeded 200,000 units for the first time since the opening of the imported automobile market, reaching 243,900 units, accounting for more than 15% of the domestic PC market.
With five imported CV brands (Iveco/MAN/Mercedes-Benz/Scania/Volvo Trucks) joining KAIDA in 2016, CV brands started activity as KAIDA members.
The years 2000 and 2001 saw remarkable growth in sales of imported automobiles after the 1997 Financial Crisis which caused a significant slowdown in the imported automobile market.
The growth rate of imported car sales reached 100% with various new models and makers in the market. In 2002, Mercedes-Benz established its corporation in Korea and Peugeot, whose automobiles had been imported and sold through Dongbu until 1998, re-entered the Korean market with Hanbul Motors as its official importer.
Having overcome the so-called IMF crisis, the imported automobile market has been recovering in earnest since 2001, selling more cars. Diverse brands debuted in the Korean market, and local affiliates were established. After going through periods of quantitative and qualitative growth, it lays the foundation for a market leap. Until 2001, imported automobiles in the domestic PC market, with a market share below 1%, surpassed this threshold in 2002 by recording 16,119 units and achieving a market share of 1.3% for the first time. Subsequently, the imported automobile market showed significant annual growth, renewing sales records each year: 19,481 units in 2003, 23,345 units in 2004, 30,901 units in 2005, 40,530 units in 2006, and 53,390 units in 2007. In 2008, it entered the domestic PC market with a historic 6%, recording 61,648 units. However, in 2009, the growth slowed due to the global economic crisis that hit from late 2008, and it recorded 60,993 units.
The wind of globalization and openness after 1994 made no exception for the market of imported automobiles.
There was stronger trading pressure on the domestic motor vehicle market as the domestic motor vehicle sales exceeded one million. After all, customs duties were reduced to 8% in January 1995, and the acquisition tax for a PC over 70,000,000 won was slashed from 15% to 2%. In September of that year, even the special consumption and the automobile taxes were reduced due to the execution of automobile agreements between Korea and America. Furthermore, restrictions on sales agents and advertisement time were also abolished.
As a result, the imported automobile industry, which had regained its vigor, radically increased sales thanks to promotional activities. The sales of imported automobiles, which were only less than 2,000 vehicles by 1993, enjoyed an unprecedented boom as they sold 3,865 vehicles in 1994, 6,921 vehicles in 1995 and 10,315 vehicles in 1996. However, in the wave of IMF, the sales of imported automobiles sharply decreased from 8,136 vehicles in 1997 to 2,075 in 1998, leading to a severe crisis. In 1999, the sales increased to 2,401 by 15.7% than in the preceding year but the market share of imported automobiles against the sales of domestic PCs was only 0.3%.
In the meanwhile, as the domestic market size for imported automobiles became larger, foreign makers went into the market themselves. Starting with BMW in 1995, Chrysler and Ford established corporations in Korea and GM also began the active marketing activity from 1999. VOLVO and SAAB were equipped with a direct sales system for PCs and in 2000, Toyota established a corporation in Korea. While imported automobiles had long been perceived as luxuries, they had achieved considerable success in their own way. First of all, imported motor vehicles had an influence on changing the characteristics of domestic motor vehicle 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 1980s. In a position of makers, they continued to be short of cars to sell. Makers focused more on producing popular models than introducing new technologies.
What importing companies showed in their marketing activities was the attitude to make much account of customers in the users' market.
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.
mporting 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.
It was January 1987 when South Korea started to import motor vehicles for the first time. The government opened the market for large motor vehicles of 2.0L or more and small motor vehicles of 1.0L or less on the preferential basis.
And the following year, in April 1988, the displacement regulations for all vehicle types were lifted, leading to complete openness. At that time, the prevailing atmosphere was overwhelmingly negative due to the fact that the shrinking of the domestic motor vehicle industry in the initial stage of growth, foreign exchange waste, overconsumption, and creating a sense of discomfort between classes due to luxurious trends. Sales of imported automobiles were insignificant. The companies to launch the sale of imported automobiles in the first year of 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 1988, the sales increased to 263 vehicles as Dongbu(Peugeot), Doosan(Saab), Kia(Ford), Keumho(Fiat) and Ssangyong(Renault) joined the sale of imported automobiles. Furthermore, customs duties of 50% went down gradually to 20% in 1990. While the overall sales figures were not substantial, the media focused on the sales growth rate. Criticisms of a preference for foreign motor vehicles or overconsumption intensified, escalating into a social issue However, the actual imported automobile industury was undergoing considerable difficulties. That was because the increased sales figures were mostly dominated by Kia SABLE.
Starting sales from October 1989, SABLE, imported by Kia through the original equipment manufacturing system(OEM), sold 493 vehicles for three months and 1579 vehicles in 1990, reaching nearly half of the total sales of other imported automobiles. People were more concerned about the fact that the sales of imported automobiles increased than the blame that domestic manufacturers imported foreign motor vehicles to sell.
After this, the imported automobile market had a tough time due to the tax investigation for owners of imported automobiles. Sales were only 1,735 vehicles in 1991, 1,817 vehicles in 1992 and 1,987 in 1993. In the meantime, some importers had no choice but to suspend operations such 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 importers were in difficulties. Gray importers meant importers without any direct exclusive import contract with makers to import and sell motor vehicles from dealers in other countries. They mainly sold sports cars or vans, which were not imported by official importers. However, it was difficult to secure their position jostled by official importersdue to A/S and quality guarantee, etc.
