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Monday November 5, 3:51 PM Popularity of Toyota, Honda Reflects Shift in S.Korean Sentiment SEOUL, Nov 5 Asia Pulse - At a glittering showroom in Seoul's affluent Gangnam district, Park Hyun-soo gazed at a CR-V sport utility vehicle made by Honda Motor (TSE:7267), the best-selling foreign brand in South Korea this year. "It's so cool. In particular, the finish and the interior are gorgeous," said Park, a foreign insurance company manager in his late 30s, who is considering buying a Japanese-made SUV to replace his Hyundai Sonata. "I'm a bit worried about buying a Japanese car because of history-related disputes, but my top priority is brand and design." Park said that the Honda SUV, which sells for 30 million won (US$33,000) here, is in his price range, whereas the more modest Santa Fe SUV made by Hyundai is priced at around 28 million won. Park's keen interest in Japanese cars shows dramatic changes taking place in the mindset of South Koreans. Only a decade ago, South Koreans who bought foreign cars were considered unpatriotic and even targeted for government tax probes. "People don't really care about driving Japanese cars these days. They offer superior value over Hyundai," Park said as he strolled past the Honda showroom on his way to a Toyota showroom a few kilometers away. Middle-class people like Park are emerging as a key potential customer base for foreign cars in South Korea, where sales growth of imported vehicles outpaces that of domestic brands like Hyundai and its affiliate Kia. For the first nine months of this year, a total of 38,508 imported cars were sold, up 23.2 per cent from a year earlier, according to data by the Korea Automobile Importers and Distributors Association (KAIDA). Of the over 20 foreign brands available on the Korean market, three Japanese automakers - Toyota (TSE:7203), Honda and Nissan (TSE:7201) - grabbed 32 percent of the market with a combined 12,511 units sold during the period. This represents a 43.2 per cent jump, compared to a 12.3 percent gain by BMW and other German brands. In addition, the top 10 sales list included five Japanese models. History-related anti-Japanese sentiment is still strong in South Korea, especially among older generations, but younger Koreans are more open and receptive to Japanese pop culture and products. Japan ruled the Korean Peninsula as a colony from 1910 to 1945. "Among the younger people, particularly in their late 20s and 30s, who are possibly the most international of all population segments, there seems to be a more openness to all nationalities, including Japanese," said Tom Coyner, the head of the Seoul-based consulting company Soft Landing Korea Ltd. "As they mature into more affluence, younger Koreans are likely not to see anything particularly unpatriotic in buying Japanese goods," Coyner said. The nature of recent anti-Japanese movements in South Korea, Coyner said, shows that Koreans are exercising their patriotism by being against the Japanese government, "rather than strictly anti-Japanese." "As such, if a car by any manufacture, including a Japanese one, offers a superior value, many Koreans will buy that vehicle regardless of origin," he said. An annual survey, jointly conducted in October by South Korea's daily Hankook Ilbo and Japan's Yomiuri Shinbun, showed that 37.5 percent of South Korean respondents believed that their country's relations with Japan are good, which compared with 12.1 per cent a year earlier. Meanwhile, 72.3 per cent of Japanese respondents believed Seoul-Tokyo ties are "optimistic," the highest since the survey was launched in 1995. The survey polled 1,000 adults on both sides. Apparently encouraged by the new pattern of South Korean consumerism, Toyota, Honda and other Japanese carmakers, are preparing to eat into the nation's mid-sized segment, a traditional stronghold of Hyundai (KSE:005380) and Kia (KSE:000270). Last month, Ichiro Ogisho, head of Toyota's Korean unit, said the world's second-largest automaker is "definitely reviewing" the possibility of selling in South Korea non-Lexus models like the Camry, the most popular car in the U.S. for years. In addition, Colin Dodge, Nissan's senior vice president for overseas markets, said the company is considering selling three mid-sized models -- the Altima sedan and the Murano and Rogue sport-utility vehicles -- in South Korea late next year. In early October, Dodge told reporters that it's the "right time" for Nissan to add new brands in South Korea. Nissan, he said, hopes to become one of top-selling foreign brands in South Korea within several years. Another Japanese automaker, Mitsubishi Motors Co., is also preparing to make up for lost time in South Korea. Daewoo Motor Sales Corp., an affiliate of GM Daewoo Auto & Technology Co., a unit of General Motors Corp., said it plans to market Mitsubishi passenger cars here before the end of this year. Industry executives predict that the South Korean market for imported vehicles will double over the next three years, as dealers cut prices. "I expect foreign brands to account for a 10 per cent share of the Korean auto market by 2010," local daily Dong-a Ilbo quoted Wayne Chumley, president of Chrysler Korea Sales Co., as saying in early October. Yoon Dae-sung, an executive managing director of the KAIDA, said, "The imported car market experienced expansion of its customer base by introducing various new cars and holding price competitiveness." If the market share of imported cars breaks the 10 per cent mark, the impact on Hyundai and Kia, which sold only 1,398 units in Japan in the January-September period this year, will be serious, analysts say. Hyundai and Kia, which have so far monopolized the nation's 1-million unit auto market, are already losing the trust of some of their loyal consumers. Many Koreans complain about lousy after-sales service, poor quality and design, and unfair pricing of Hyundai and Kia. For instance, Hyundai sells its Santa Fe SUV for 28 million won in South Korea - while in the U.S. the same car costs only 20 million won. "Hyundai and Kia need more competition at home as they have provided little value to Korean consumers," said Park, the foreign insurance company manager, as he eyed the Honda. "They must learn many things about quality and design from the Japanese." (Yonhap)