It's only been a couple of weeks since the 2018 Winter Olympics in Pyeongchang concluded, but for two of Germany's major premium brands the hunt for gold in South Korea continues. BMW's and Mercedes-Benz's sales are booming and, unlike Europe, diesels have been a major driver of the success.
Models such as the BMW 520d or Mercedes-Benz E 220d routinely rank as the best-selling imports.
Typically, when experts talk about strategically important car markets, the Korean peninsula doesn't come up. Instead the focus lies mainly on the BRIC countries: Brazil, Russia, India and China.
While China has become the single-biggest market for Mercedes, BMW and Audi, the other three have failed to live up to their potential. Instead, a market of only 1.53 million light vehicles has stepped into the vacuum. Sales of Mercedes cars in South Korea increased by 20 percent last year. Remarkably, that represents a slowdown over 2016, when volumes surged by a third.
Some of the growth can be attributed to a 2011 free trade agreement with South Korea that first reduced the 8 percent tariff on cars imported from the EU before eventually eliminating it entirely. Executives say what is even more important has been a change in attitude. A rising number of consumers are eschewing brands controlled by large family-owned conglomerates known as the chaebol, including Hyundai, in favor of foreign makes.
Several such groups have become embroiled in scandals where the government helped keep chaebol executives found guilty of bribery and corruption out of jail. Now it's no longer considered your patriotic duty to help the domestic brands, especially if you can afford better.
"There's a new spending paradigm called YOLO: You Only Live Once," said IHS Markit senior analyst Andy Bae. "Thanks to supportive financial and promotion programs, YOLO consumers do not hesitate to purchase premium cars from Mercedes and BMW."