Korean And Japanese Automakers Offer Promotions And Discounts To Boost Sales Amid Volkswagen Scandal
Following the emission scandal involving German automaker Volkswagen, analysts say that the issue could be beneficial for other automakers, particularly for South Korean carmakers.
"For the first eight months of 2015, Hyundai Motor and Kia's combined market share in the US was 8.1 percent, versus 3.8 percent for Volkswagen," Daiwa Capital Markets analyst Sung Yop Chung says, as noted by CNBC on Sep. 24. "Although Hyundai Motor doesn't have much of a diesel line-up in the US, the news could result in market share gains for both Hyundai and Kia."
He goes on, "Furthermore, Volkswagen also has a competitive advantage in emerging markets. If the scandal becomes more global, it could provide tailwinds for [South Korean carmakers]."
Reports reveal that Hyundai Motor hopes to entice customers as the company will have a discount event this month. Korea Joongang Daily reported on Friday that the South Korean leading automaker will offer discounts of up to 500,000 won ($430) not only on its mid- to high-end cars, but also on its sports utility vehicles (SUVs).
Hyundai's Sonata, Grandeur, Aslan, Genesis, Equus, Tucson, Santa Fe and Max Cruise SUVs will be discounted on the event. Aside from these, Accent, Avante MD, Velsoter and hatchbacks i30 and i40 and Genesis Coupe will have 300,000 won ($260) discounts.
"It seems like Hyundai Motor Group is not only trying to secure its domestic market share but is also out to eat into the imported vehicle market," says professor Ko Kwang Ho of Ajou Motor College. "It's a marketing strategy that is out to increase market share by increasing the number of customers who will be purchasing gasoline fueled cars and eco-friendly vehicles as they have started to turn their back on German brands, especially the diesel models."
Kia Motors will also offer discounts regardless of whether customers have formerly owned an imported vehicle. The Hyundai affiliate will offer up to 300,000 won ($260) discounts for its small compact models including Morning, Ray, Pride, K3, K5 and K7.
Aside from Korean automakers, Japanese carmakers are also making a move to boost their sales through promotions and discounts. Toyota will offer a gas gift certificate worth of 3 million won to those who will acquire its major hybrid model Prius.
"When including the 1 million won subsidy on eco-friendly vehicles, the maximum 1.4 million won cut on acquisition and registration taxes for hybrid cars, they can get the same effect as getting a maximum 5.4 million won discount," an official from Toyota reveals.
On the other hand, a 24-month installment plan with no interest will be offered by Nissan for its Altima 2.5 sedan. In addition, a gas gift certificate worth of 1.2 million won will be given to those who will purchase the same model in cash.
