Korean car exports to East Europe surge 13 fold since '01

In a sign that Korean carmakers are relying less and less on the United States to maintain growth, exports to Eastern European nations rose more than 13 fold between 2001 and last year, the Korea Automobile Manufacturers Association said yesterday.
According to KAMA, local carmakers' exports to Eastern European nations rose by 1,389 percent from the 32,206 units recorded in 2001 to over 447,000 units last year.
With the increase, the region has become the country's third-largest automotive export destination, accounting for 15.7 percent of last year's car exports. In 2001, automotive exports to Eastern European countries only accounted for 2.1 percent of the total. It had been the smallest export destination among the eight regions in KAMA's statistics. The eight regions are Africa, Asia, Central and South America, Eastern Europe (including Russia), North America, the Pacific, Western Europe and the Middle East.
Over the same period, the value of the country's automotive exports to Eastern Europe increased by more than 20 times to come in at about $4.79 billion. The value of the country's car exports to the region in 2001 was $224.8 million.
By country, Russia was the largest importer of Korean cars in the region followed by the Ukraine. Last year, Russia imported more than 255,000 vehicles, accounting for 57 percent of Korean firms' exports to the region. The Ukraine imported about 68,700 vehicles, accounting for 15.3 percent of Eastern Europe's imports.
In comparison to 2001, the number of vehicles shipped to Russia and the Ukraine rose by 459 percent and 569 percent, respectively.
KAMA attributed the skyrocketing imports in Eastern Europe to the expansion of their automotive markets, brought on by the rapid economic growth of the region.
After Eastern Europe, exports to Africa rose by the highest margin, followed by the Middle East and Central and South American countries. Exports to Africa and the Middle East rose by 457 percent and 390 percent, respectively.
In Central and South American countries, Korean car imports rose by 252 percent.
Although North America has maintained its position as the largest importer of Korean cars, its proportion has gone down, from 46 percent in 2001 to 29.3 percent last year. The second largest export destination for local carmakers is Western Europe, accounting for 19.3 percent of the country's total automobile exports last year.
From 2001 to 2007, exports to North America and Western Europe increased by 20 percent and 28.7 percent, respectively.
By Choi He-suk
(cheesuk@heraldm.com)
2008.04.04

Summary>
Although North America has maintained its position as the largest importer of Korean cars, its proportion has gone down, from 46 percent in 2001 to 29.3 percent last year. The second largest export destination for local carmakers is Western Europe, accounting for 19.3 percent of the country's total automobile exports last year.
With the increase, Eastern European nations have become the country's third-largest automotive export destination, accounting for 15.7 percent of last year's car exports. In 2001, automotive exports to Eastern European countries only accounted for 2.1 percent of the total.
After Eastern Europe, exports to Africa rose by the highest margin, followed by the Middle East and Central and South American countries. Exports to Africa and the Middle East rose by 457 percent and 390 percent, respectively.
Opinion>
As the North America is stagnant and the Third World Countries’ economy grows, Korean car makers need to take part in the market. One thing that they must keep in mind is they should respect the countries environment such as economic structure, climate, culture, law, average earnings per capita, natural resources, etc
Let me take an example. If Korean car makers decide Russia as a target market, they can reduce cost and price by not installing air conditioner. And they can invest the cost for air conditioner to develop heating system in car to give Russian customer more satisfaction. On the contrary, they can sell cars uninstalled heater.
If they take economy into account, they will concentrate on selling small cars. Because the Third World countries have pyramid economic structure and the average earnings per capita is low, the car makers will concentrate on selling low price cars.
Third, natural resources. The Third world countries have abundant natural resources and wide land. So, they might need cars that are strong and powerful such as SUV without worrying about oil price.
I focused on product, but if set the prices, places and the ways to promote by respecting such as economic structure, climate, culture, law, average earnings per capita, natural resources, etc, the Korean car makers will have predominance in the market.

20600613 Jeon, Hyejin