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Products strategy boosts sales of Korean cars

Kelly From Gasgoo.com| April 09 , 2009 16:19 BJT

Not just America's ailing carmakers that have been clobbered by the recession and the corresponding collapse in demand for new vehicles, but every other carmaker is suffering, too. All of which makes the achievements of South Korean carmakers particularly remarkable. Beijing Hyundai and Dongfeng Yueda Kia, two joint-venture companies between Korean and Chinese carmakers, recorded all-time high sales in Jan., 2009, surging 35% and 15% respectively. Gasgoo.com had an executive interview with Dr.Songlin Mei, General Manager of JD Power Asia Pacific China operations, discussing Korean carmakers performance in China.

Gasgoo: How was Korean carmakers' development in China in 2008?

Products strategy boosts sales of Korean carsSonglin Mei: Surely it is in the spotlight. Korean carmakers' market share increased by 7% in 2008, with Beijing Hyundai's share increasing by 27% and Dongfeng Yueda Kia posting a 39% market share growth. The rapid market expansion of Korean cars is attributed to their successfully launched new products, such as Beijing Hyundai's Yuedong, Dongfeng Yueda Kia's Rio and Sportage, which cater to Chinese consumers.

Gasgoo: Korea-produced cars like Yuedong contributed a lot to Korea cars' market share. In what aspects do Korean carmakers succeed to achieve that?

Songlin Mei: They succeeded in doing three aspects:

- A relatively successful products strategy. Both Beijing Hyundai and  Dongfeng Yueda Kia have key products to compete in China's largest segment -- the mid-sized car market, like Elantra, Yuedong and Kia Cerato.

-  SUV's fast development stimulated Korean cars sales in 2008, with Dongfeng Yueda Kia's Sportage posting the best performance. Tucson, the second best-selling Beijing Hyundai model, contributed to the carmaker's stable development.

- A balanced performance of products also promotes Korean cars to enjoy fast growth of market share, such as in fuel consumption, safety, quality, interior, exterior design and style and price.

Gasgoo: Do you think Korean cars will develop well in 2009?

Songlin Mei: Korean cars are also facing challenges in 2009, like other brands. During a market downturn, cost control stands in the breach. Korean carmakers did well in controlling cost, but whether they will develop well depends on their efforts to offer better new products to satisfy Chinese consumers.

Gasgoo: What are the disadvantages existing among Korean carmakers?

Songlin Mei: Although Korean carmakers enjoyed outstanding growth in 2008 (compared to German and Japanese carmakers), they still should enhance their development in brand reputation and brand popularity. Different from German and Japanese cars' clear-cut brand feature and image, Korean cars sales depend on its commodity feature, rather than on brand promotion.

Besides, the loss of talents is a bottleneck for Korean automakers to sustain their long development, no matter for OEMs or for dealers.

Gasgoo: What should Korean carmakers do if they want to achieve long-term development in China?

Songlin Mei: Korean carmakers should enhance their local R&D to develop their Chinese joint ventures into companies with a complete value chain. What's more, they should also form a corporate culture defined with local flavor and build an efficient talents incentive system.

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