SEOUL, Nov. 6 (Korea Bizwire) — A lack of new models this year is adversely affecting car sales by GM Korea Co. and Renault Samsung Motors Co. in the South Korean market, industry observers said Sunday.
The drop in demand is making it unlikely that the two carmakers will meet their respective sales targets for 2017 and is compelling both to launch aggressive marketing campaigns to draw in buyers, sources said.
GM Korea, the South Korean unit of U.S. auto giant General Motors Co., suffered negative growth in domestic sales up till October of this year with the exception of January.
Sales numbers, in particular, have even failed to top 10,000 units in September and last month, fueling worries that GM Korea may decide to halt operations here completely in the face of mounting losses and rocky labor-management relations.
October sales were effectively halved vis-a-vis last year, with demand for all car models made by the automaker losing ground. In the first 10 months of this year, GM Korea, which makes cars here under the Chevrolet brand, sold 110,176 vehicles in Asia’s fourth-largest economy, down a sharp 23.9 percent compared with the same period last year.
The total is equal to 57 percent of the carmaker’s annual sales target of 194,000 units set early this year.
The carmaker has recently launched the all new Cruze diesel compact sedan, but it is not viewed as a “volume model,” making it unlikely that it can bolster sales. Its gasoline Cruze that underwent a full change in January was not well-received here mainly due to its high price and concerns over parts quality.
Renault Samsung, the local arm of French automaker Renault S.A. that started the year on a positive note with solid sales of its SM6 midsize sedan and QM6 SUV, posted sales surpassing the 10,000 unit mark in March.
The carmaker, however, started to lose steam with the launch of the facelifted Sonata sedan by rival Hyundai Motor Co., with the company taking further hits with the introductions of the Kona B-segment SUV and the Stonic crossover by Hyundai’s corporate cousin Kia Motors Corp. The Kona and Stonic compete directly with its popular QM3 small crossover.
The loss in momentum caused aggregate sales for 2017 to backtrack 2.6 percent on-year to 82,282 units. This is equivalent to 69 percent of the 120,000 units the carmaker had targeted for the year.
Car market sources added that the delay in the introduction of the Clio mini car due to a supply shortage hurt the carmaker’s ability to capitalize on early gains.
Renault Samsung said the Clio, which sold over 13 million vehicles worldwide, should reach the local market in 2018.
The poor showing, meanwhile, has led to the CEOs of the two companies being replaced this year, with the new heads moving to improve profitability through sales gains.
Reflecting this, GM Korea and Renault Samsung have both offered attractive incentives to car buyers.
GM Korea has announced cash discounts of upwards of 4.5 million won (US$4,000) and interest free installment payment plans for seven of its models.
Renault Samsung too has countered with 3 million-won cuts in the price tag for its SM6 sedan and QM6 SUV for the month of November, with deductions of 1.5 million won being offered for its QM3 small crossover.
The carmaker has moreover opened a QM3 “experience store” in Busan, South Korea’s No. 2 city, to lure customers.