Imported Car Sales Surge, Service Center Expansion Crawls

Imported Car Registrations Reach 2 Million
Only 429 Service Centers Across 16 Brands
Increase of Just 53 Centers Since 2017 Despite 530,000 New Car Sales
Tesla, Eyeing the '10,000 Club,' Has Only 2 AS Centers
Proactive Investment Needed to Match Growth

[Asia Economy Reporters Suyeon Woo, Jihee Kim] Although the imported car market in South Korea is rapidly growing to the extent that the number of imported cars running on domestic roads this year has exceeded 2 million units, the expansion of infrastructure for after-sales service (A/S) remains insufficient. There are calls for proactive investments that match the high-end image of imported car brands and the market growth trend.

According to the industry and the Korea Automobile Importers & Distributors Association (KAIDA) as of the first quarter of this year, the number of service centers for 16 major imported car brands reached 429, an increase of 53 centers (14%) from 376 at the end of 2017. The 16 brands counted are Mercedes-Benz, BMW, Audi, Volkswagen, Volvo, Mini, Porsche, Jeep, Lexus, Ford, Toyota, Land Rover, Nissan, Honda, Lincoln, and Jaguar, excluding overlapping service centers by brand.

This contrasts with the booming sales of these 16 brands, which sold 535,209 new cars during the same period. As of the end of last year, the number of registered vehicles for these brands also exceeded 2 million units. This means that investment in service infrastructure is still not keeping pace with the growth of imported cars.

Companies argue that the number of work bays and service personnel per center must be considered, but even with a simple calculation based on a total registration of 2 million vehicles, each center would have to handle about 4,700 vehicles. Considering the recent growth trend of the imported car market, the number of registered imported cars is expected to surpass 2.5 million by the end of this year, which could further exacerbate maintenance service issues.

The ones suffering from the lack of service infrastructure are the consumers. According to the Insurance Development Institute, the average repair period based on last year's automobile insurance premiums was 6.2 days for domestic cars, compared to 10 days for imported cars. Considering the high price of imported cars, consumers end up paying a lot for lower quality service.

Among the 16 imported car brands, 14 brands except for Nissan and Jeep have steadily increased their service centers over the past three years, but no brand has established more than 100 centers nationwide. As of the first quarter of this year, the brands with the most service centers are Mercedes-Benz (69), BMW (60), Audi (38), and Volkswagen (35).

In particular, for brands that have recently achieved the annual '10,000 units club' and whose sales are rapidly increasing, the response over the next 2 to 3 years is a concern. Tesla, which recorded sales of over 7,000 units in the first half of the year and is expected to reach 10,000 units annually this year, currently has only two official service centers nationwide, located in Gangseo, Seoul, and Bundang, Seongnam. Although there are plans to add two centers in Busan and Bundang within the year, this number is far from sufficient compared to the recent sales growth rate.

Volvo, which showed a remarkable growth trend and joined the 10,000 units club last year, recognized this issue and announced plans to invest 150 billion KRW over three years to double its service centers from 27 to 52. Initially, it plans to open three new centers in the first half of this year and add three more in the second half.

Professor Kim Pil-soo of Daelim University’s Department of Automotive Studies said, "With the recent surge in imported car sales, especially among companies selling more than 10,000 units annually, the shortage of service centers is intensifying. Since infrastructure development typically takes about 2 to 3 years, companies need to take more proactive steps in related investments."

This content was produced with the assistance of AI translation services.