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| Mercedes-Benz Chairman Dieter Zetsche introduces its luxury S-Class sedan. / Courtesy of Mercedes-Benz Korea |
A day apart, chiefs of 2 firms host unveiling events in Seoul
By Choi Kyong-ae
Hyundai Motor Group and Mercedes-Benz are in a “turf war” to take away each other’s prized segment, with the outcome set to affect their future in the long run.
Hyundai wants to go premium, where Mercedes-Benz is the leader. The German carmaker is also trying, with initial success, to take a piece off Hyundai in the lower-price segment.
From the look of things, their fight is likely to get under way in the Korean market before spreading elsewhere.
With the stakes being so high, the heads of the world’s third and fifth automakers are leading the fight.
Last week, Hyundai Chairman Chung Mong-koo and Mercedes-Benz chief Dieter Zetsche hosted the launch of their key new models in Seoul. They were the Genesis sedan from Hyundai Motor and the S-Class from Mercedes-Benz.
“Korea’s auto market has had six-fold growth in its import segment within the past 10 years. And we believe Mercedes-Benz Korea has the potential to double its sales volume by 2020,” Zetsche said at the S-Class unveiling, Wednesday.
Mercedes-Benz sold a total 20,822 vehicles in Korea’s passenger car market in the January-October period, a 21 percent jump from a year earlier. Korea is now the German luxury carmaker’s fifth-largest market for its premium S-Class and E-Class models.
A day earlier, Chung showed his strong commitment to the fully-revamped Genesis sedan by making a rare appearance at its launch ceremony.
“We are competing with European premium carmakers” with the company’s only four-wheel drive sedan, the 75-year-old chairman said. Hyundai plans to begin sales of the new Genesis in Europe and the U.S. from January following its local launch.
The previous Genesis model has been available in the U.S. since 2009 but next year will be the first time for the new Genesis to go to Europe. Hyundai has invested 500 billion won ($472 million) to develop the premium sedan over the past four years.
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| Hyundai Motor Chairman Chung Mong-koo, right, stands with premium Genesis sedan. / Courtesy of Hyundai Motor |
A growing appetite among young Koreans for German premium brands, in particular, are further pressuring Chung to escalate the move to transform Hyundai into a premium car provider. The maker of the Sonata sedan and the Santa Fe sport-utility vehicle has had a reputation for offering competitively-priced models.
Given this, Hyundai is facing a sense of urgency to keep its captive market share at home and at the same time be accepted as a premium-car brand in the market.
Towards this end, the company said it will temporarily operate The Genesis private showrooms later this year in Seoul and Busan, the country’s two biggest cities, to allow customers to experience its premium value and advanced technology.
However, analysts say it will take time for a mass-market carmaker to earn the image of a premium one. “Particularly in Europe’s premium car market dominated by German companies, it will be an uphill battle for Hyundai to be accepted,” Suh Sung-moon, an analyst at Korea Investment & Securities, said.
Meanwhile, Mercedes-Benz Korea has been stepping up its efforts to diversify its product lineup with compact models over the past two years.
Mercedes-Benz has long been a luxury car provider in Korea but it is now looking to woo young customers in their 20s and 30s. It introduced the A-Class compact car in August following the B-Class launch last year, being a major threat to Hyundai and Kia.
Zetsche said “A in the A-Class means Attack” and the A-Class is a core part of the company’s journey to complete its premium lineup.
Mercedes-Benz’s full-scale attack seems to be picking up speed in Korea. Last week, it unveiled plans to build research and development, training and logistics centers in Korea.
“The best is yet to come,” Zetsche said hinting the German company is set to claim a bigger share here.
Little doubt, a more diversified product lineup in imported carmakers offers local customers more options to choose from. Lower prices will allow potential buyers to consider buying an imported car instead of a local one.
Hyundai and Kia currently sell seven out of 10 vehicles sold in Korea but their domestic sales are slowing due to rising demand for imported vehicles. Seven out of 10 imported autos sold here in the first 10 months are from German brands Audi, BMW, Mercedes-Benz and Volkswagen.
Hyundai faces bigger challenges in the home market.
As the free-trade agreement with the EU and the U.S. drives down tariffs on imported vehicles, import brands took a 10 percent share of the Korean passenger car market last year. And the share keeps rising.
From January to October, import car sales climbed 21 percent to 130,239 autos and 78 percent of them were from Europe, according to the Korea Automobile Importers and Distributors Association.
Threatened by higher demand for foreign cars, Hyundai and Kia took the rare step of cutting the prices of their flagship models such as the i3O, i40 hatchback and the K9 large-size sedan early this year. But domestic sales still remain sluggish.
Hyundai owns a 34 percent stake in Kia and the two together form the world’s fifth-largest carmaker by sales.
