Are Hyundai-Kia, Big 5 monopolizing the Korean auto market?

Are Hyundai-Kia, Big 5 monopolizing the Korean auto market?. May. 28, 2012 05:48. alwaysj@donga.com.

The 80-20 rule best describes the Korean automotive market this year. The industry`s top players are dominating not only the domestic-brand auto market but also the import auto market.

The combined market share of Hyundai Motor and Kia Motors exceeded 80 percent in the domestic-brand auto market, while that of the Big Five comprising BMW, Mercedes Benz, Toyota, Volkswagen and Audi reached nearly 80 percent in the import auto market. These top players are increasingly dominating the Korean market both in the locally assembled vehicle segment and imports.

○ Hyundai, Kia effectively monopolizing market

According to the Korea Automobile Manufacturers’ Association, Hyundai controlled 46.8 percent and Kia 34.7 percent of the locally assembled car market between January and April this year. Given that both companies belong to Hyundai Motor Group, their combined market share is 81.5 percent.

Hyundai and Kia are the only two domestic automakers that have a double-digit market share. GM Korea controls 9.9 percent and Renault Samsung 4.9 percent, showing a significant gap among the top two.

Hyundai and Kia are increasingly solidifying their dominance. Their combined market share has been rising from 78.1 percent in 2010 to 79.8 percent in 2011. For this reason, critics say the domestic-brand auto market is effectively monopolized by Hyundai and Kia.

This trend will likely further accelerate because rivals GM Korea and Renault Samsung have yet to introduce competitive models. Since introducing the Chevrolet brand to Korea last year, GM Korea has staged an aggressive marketing campaign but its market share remains under double digits. The company has no new models except the Corvette this year, and the situation is little different at Renault Samsung.

In contrast, Hyundai and Kia have introduced the All-New Santa Fe and the K9, respectively, this year, which appear to be highly promising models. The Santa Fe, whose sales began this month, is so popular that buyers have to wait two months to get their vehicles delivered.

A Hyundai Motor Group source said, “Consumers have given positive responses as Hyundai-Kia’s management of quality has gained momentum,” adding, “Now our rivals in the domestic market are imported brands such as BMW and Mercedes Benz.”

○ Top players raising dominance in imported car segment

Imported cars have grown so popular in Korea that sales topped 100,000 for the first time last year. Yet not all imports are enjoying a boom. According to the Korea Automobile Importers and Distributors Association, BMW (including the Mini) ranked first with a 27.3-percent market share from January to April this year, followed by Mercedes Benz with 15.2 percent and Toyota (including Lexus) with 12.6 percent.

Combined with those of Volkswagen (12.5 percent) and Audi (11.6 percent), the Big Five’s market share is as high as 79.2 percent.

The Big Five’s dominance is increasingly intensifying in the Korean market for imported cars, just as in the domestic-brand auto market. The Big Five’s market share has been growing from 70.3 percent in 2010 to 75.2 percent last year. While each member of the Big Five has sold as many as 10,000 to as little as 4,000 units this year, six other brands including Volvo and Peugeot have yet to hit 1,000 units sold this year.