Toyota Enters Korea, Threatens Hyundai's Market Hold
Oct. 20 (Bloomberg) -- Toyota Motor Corp., the world’sbiggest automaker, began sales of its namesake brand in SouthKorea, challenging Hyundai Motor Co. and affiliate Kia MotorsCorp. in a country where they have a 72 percent market share.
Toyota will sell Camry sedans, Camry hybrids, Prius hybridsand RAV4 sport-utility vehicles, the Japanese company said todayin a statement from Seoul. The carmaker has been selling itsluxury Lexus brand in the country since 2001.
Toyota’s entrance into Korea, Hyundai’s most profitablemarket, may distract the Seoul-based automaker in the U.S.,where it has won market share helped by promotions and a weakerwon. Hyundai faces increasing competition at home as Korea easestrade restrictions and automakers such as Toyota look for newmarkets to offset plunging sales in the U.S., Europe and Japan.
Hyundai “will keep a close eye on its bigger rival for thelong term,” said Chae Hee Gun, an analyst at Taurus InvestmentSecurities Co. The Korean company’s position in its home market“is absolutely abnormal.”
South Korea’s biggest carmaker had 46 percent of thecountry’s 1.25 million passenger-vehicle market last year,according to the Korea Automobile Manufacturers Association.Kia, the nation’s second-biggest, controlled 26 percent.
Toyota will sell Camry models with 2.5-liter gasolineengines for 34.9 million won ($29,900). That’s pricier thanHyundai’s Sonata, which sells for between 21.3 million won and26 million won in the domestic market.
Sonata, Camry
Toyota aims to sell 500 vehicles a month this year andraise that to 700 from next year, Taizo Chigira, president ofthe company’s Korean unit, said today in Seoul.
Hyundai introduced its sixth-generation Sonata last monthto take on Toyota’s Camry globally as the Korean company pushesto be more than a low-cost alternative to Japanese carmakers. Inthe U.S., a weaker won and a stronger yen has helped the companytake customers from Toyota and General Motors Co. It has boostedsales 1.3 percent amid a 27 percent plunge in the overallmarket.
The carmaker’s global market share reached a record 5percent in the first half on higher sales in China and India.Domestic sales surged 61 percent in September.
“The home market has been a piece of cake for Hyundai forso long,” said Lee Jin Sik, a Seoul-based analyst at CSMWorldwide Inc. “Efforts to protect its most important,profitable market could lead to an enhancement of globalcompetitiveness.”
The automaker has more than doubled in Seoul trading thisyear. It fell 1.7 percent to close at 99,300 won on the KoreaExchange while Toyota fell 1.4 percent to 3,580 yen in Tokyo.
Toyota Loss
Toyota, forecasting a 450 billion yen ($5 billion) net lossin the year to March, posted a 28 percent slump in U.S. salesthis year as the biggest financial crisis since the GreatDepression and job losses cut consumer spending. The companywill face two more difficult years, President Akio Toyoda saidin June.
South Korea opened its vehicle market to foreign brands in1987, when only 10 imported cars were sold. Toyota’s Lexus,Honda, Bayerische Motoren Werke AG and other imported brandsaccounted for 6.04 percent of the market last year with salesof 61,648 vehicles.
Eventually, imported cars may take a 10 percent marketshare, according to Yoon Dae Sung, an executive managingdirector at Korea’s auto importers group.
“Toyota, Honda and other non-luxury brands will surelyspur growth,” he said.
To contact the reporter on this story:Seonjin Cha in Seoul at scha2@bloomberg.net
Last Updated: October 20, 2009 04:01 EDTSource: Bloomberg
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