Comfort-loving Koreans shun small cars

Kia Motors Corp.`s compact car, Morning, saw a 69 percent sales increase last month over the same period last year. The company said the sales growth is attributed in part to the government`s plans to increase the upper limit for engine displacement for city cars - for which the government provides tax benefits - including the Morning model in the city car segment. GM Daewoo Auto and Technology Co.`s city car Matiz also saw its sales rise by nearly 50 percent from the previous year, leading to the prediction that the local small cars market is heading for a revival.

However, small cars have never been a very popular choice for drivers in Korea, despite the major lack of parking spaces, the notoriously heavy traffic, and high fuel prices. Even the worldwide concern about pollution and depletion of fossil fuel reserves doesn`t seem to be enough to persuade the country to opt for smaller cars that use less fuel.

As a result of the country`s distaste for small cars, local automakers` lineup of smaller cars is small, in contrast to foreign brands.

Of Hyundai-Kia Automotive Group`s lineup of 21 passenger cars and recreational vehicles, only seven have engine displacements smaller than 1,600 cubic centimeters. Domestic sales figures show that small vehicles play an even smaller role for the auto giant. According to a Hyundai-Kia public relations officer, less than 20 percent of the two automakers` domestic sales were accounted for by compact cars last year. However, at 40.5 percent, the proportion of Hyundai-Kia`s 2006 exports accounted for by compact cars was more than double the figure for local sales.

<**1>

"The local market for smaller vehicles is small, in contrast to some of the countries the company exports to, because Koreans favor larger cars with more room in the cabin," she said.

"The main export destinations for the group`s compact cars are Europe and South American countries where consumers tend to place more emphasis on the fuel economy and the usefulness of a vehicle."

With six of 11 models, including two small trucks, produced by GM Daewoo being in the compact or smaller segments, the company places a much larger emphasis on the smaller segments. However, GM Daewoo is no exception, in that the proportion of exports accounted for by small cars outpaces that of domestic sales by almost 30 percentage points.

In particular, city cars - currently defined as cars with less than 800-cubic- centimeter engine displacement - have been extremely unpopular among both local consumers and automakers.

Since 1998, when the country was hard hit by the Asian financial crisis, and city cars` share of the local passenger car market rose to 27.5 percent, city cars` market share has been falling steadily, hitting 4.7 percent last year; GM Daewoo`s Matiz is the country`s only city car. Although, beginning next year, the maximum engine displacement for city cars will be increased to 1,000 cubic centimeters from the current 800 cubic centimeters, Kia Motors` Morning will be the only addition to the segment.

However, despite the relatively large gap left in the smaller segments by local companies, many of the smallest cars produced by foreign automakers have been left out by their local sales representatives.

Volkswagen`s smallest car, the Polo, known as the Rabbit in the United States, is not available here; nor is the Peugeot 107 - a city car from the French automaker Peugeot. The local operations of the German automakers BMW and Mercedes-Benz, the companies with some of the largest share of the imported cars market, are not marketing the companies` smallest models, the 1 Series for BMW and the A-Class for Mercedes-Benz.

According to industry sources, foreign companies are taking a cautious approach to the local market for small vehicles, as the markets are very different.

"The European automotive market is characterized by a strong tendency to favor practical designs, while Koreans prefer larger, more comfortable cabins," said a Renault Samsung Motors Co. public relations officer. He added that hatchbacks and their popularity in Europe compared to their failure in Korea is the best example of the difference between local and European consumers.

"European drivers go for hatchbacks for their larger boot space, while Korean consumers like the larger capacity, but are less willing to give up the space in the cabin."



By Choi He-suk



(cheesuk@heraldm.com)