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BMW, Mercedes to encounter supply shortage in Korea

The new BMW 523d / Courtesy of BMW Korea
The new BMW 523d / Courtesy of BMW Korea

By Nam Hyun-woo



Local import auto brands including BMW and Mercedes-Benz are expected to suffer sales contractions for July, as the COVID-19-led shutdown of plants has resulted in an inventory drain here.

According to industry officials, BMW is currently running out of vehicles to sell here next month, due to the shutdown of plants in Germany in March when the COVID-19 pandemic was at its peak in Europe.

"The shutdown is affecting nearly all models, and we expect a shortage of vehicles for sale in July," a BMW Korea official said. "We believe the inventory will be normalized by August."

In Korea, imported vehicles take about three months from shipping through to delivery to customers. Industry officials say an average of one-and-a-half months is required for the shipping process and about two months are required for their official approval and pre-delivery inspections at Pyeongtaek port in Gyeonggi Province.

Vehicles delivered faster than this are inventory vehicles, which are parked at the port after finishing their pre-delivery processes.

The production vacuum in Europe from March to April is anticipated to affect import brands' Korean sales in July and August. Officials at dealer agencies also said import vehicles sold in June or before were mostly manufactured before the coronavirus shutdown and they are expecting a delay in delivering vehicles from July.

BMW has been making aggressive sales pitches this year, offering big discounts — as high as 10 million won — on its key models including the 5 Series sedans.

Due to this tactic and a number of new models introduced to the domestic markets, BMW Korea sold 21,361 vehicles from January to May this year, up 45.5 percent from a year earlier. However, such momentum is expected to slow with the belated impact of the production gap looking set to hit.



The Mercedes-Benz E-Class / Courtesy of Mercedes-Benz Korea
The Mercedes-Benz E-Class / Courtesy of Mercedes-Benz Korea

Mercedes-Benz is also experiencing a similar situation.


According to the dealers, a number of models are experiencing slowdowns in their delivery, as the shutdown of Mercedes-Benz plants in Germany is seeing it failing to meet customer demand.

"The inventory status of popular models such as the C-Class, E-Class and S-Class are sufficient," Mercedes-Benz Korea said in a statement. "We are closely coordinating with the headquarters to minimize the impact to customers."

Though Mercedes-Benz Korea said they refused to elaborate how many vehicles are left in inventory and the details on vehicle delivery status, a company official said there is was a "mixed impact" stemming from the production vacuum and steady customer demand.

Mercedes-Benz Korea sold 28,696 vehicles from January to May this year, up 8.35 percent from a year earlier. The brand has been the largest-selling import brand in Korea since 2016.

Industry officials said the inventory shortage is especially noticeable in Korea, as the country's automobile market has remained relatively intact during the COVID-19 pandemic.

According to the Korea Automobile Importers & Distributors Association, import brands sold 100,886 vehicles in Korea from January to May this year, up 12.2 percent from a year earlier.

This is also attributable to a large- scale tax benefit for customers. To spur consumption, the government has been offering a 70 percent cut in special consumption tax, and recently decided to maintain the benefit until the end of this year, while lowering it to 30 percent.

In contrast, homegrown automakers' exports have been on a sharp downtrend since the outbreak of the coronavirus. According to the Korea Automobile Manufacturers Association, Korean carmakers exported 694,196 passenger and commercial vehicles from January to May, down 32.6 percent from a year earlier.





The new BMW 523d / Courtesy of BMW Korea
The new BMW 523d / Courtesy of BMW Korea

By Nam Hyun-woo



Local import auto brands including BMW and Mercedes-Benz are expected to suffer sales contractions for July, as the COVID-19-led shutdown of plants has resulted in an inventory drain here.

According to industry officials, BMW is currently running out of vehicles to sell here next month, due to the shutdown of plants in Germany in March when the COVID-19 pandemic was at its peak in Europe.

"The shutdown is affecting nearly all models, and we expect a shortage of vehicles for sale in July," a BMW Korea official said. "We believe the inventory will be normalized by August."

In Korea, imported vehicles take about three months from shipping through to delivery to customers. Industry officials say an average of one-and-a-half months is required for the shipping process and about two months are required for their official approval and pre-delivery inspections at Pyeongtaek port in Gyeonggi Province.

Vehicles delivered faster than this are inventory vehicles, which are parked at the port after finishing their pre-delivery processes.

The production vacuum in Europe from March to April is anticipated to affect import brands' Korean sales in July and August. Officials at dealer agencies also said import vehicles sold in June or before were mostly manufactured before the coronavirus shutdown and they are expecting a delay in delivering vehicles from July.

BMW has been making aggressive sales pitches this year, offering big discounts — as high as 10 million won — on its key models including the 5 Series sedans.

Due to this tactic and a number of new models introduced to the domestic markets, BMW Korea sold 21,361 vehicles from January to May this year, up 45.5 percent from a year earlier. However, such momentum is expected to slow with the belated impact of the production gap looking set to hit.



The Mercedes-Benz E-Class / Courtesy of Mercedes-Benz Korea
The Mercedes-Benz E-Class / Courtesy of Mercedes-Benz Korea

Mercedes-Benz is also experiencing a similar situation.


According to the dealers, a number of models are experiencing slowdowns in their delivery, as the shutdown of Mercedes-Benz plants in Germany is seeing it failing to meet customer demand.

"The inventory status of popular models such as the C-Class, E-Class and S-Class are sufficient," Mercedes-Benz Korea said in a statement. "We are closely coordinating with the headquarters to minimize the impact to customers."

Though Mercedes-Benz Korea said they refused to elaborate how many vehicles are left in inventory and the details on vehicle delivery status, a company official said there is was a "mixed impact" stemming from the production vacuum and steady customer demand.

Mercedes-Benz Korea sold 28,696 vehicles from January to May this year, up 8.35 percent from a year earlier. The brand has been the largest-selling import brand in Korea since 2016.

Industry officials said the inventory shortage is especially noticeable in Korea, as the country's automobile market has remained relatively intact during the COVID-19 pandemic.

According to the Korea Automobile Importers & Distributors Association, import brands sold 100,886 vehicles in Korea from January to May this year, up 12.2 percent from a year earlier.

This is also attributable to a large- scale tax benefit for customers. To spur consumption, the government has been offering a 70 percent cut in special consumption tax, and recently decided to maintain the benefit until the end of this year, while lowering it to 30 percent.

In contrast, homegrown automakers' exports have been on a sharp downtrend since the outbreak of the coronavirus. According to the Korea Automobile Manufacturers Association, Korean carmakers exported 694,196 passenger and commercial vehicles from January to May, down 32.6 percent from a year earlier.





Nam Hyun-woo namhw@koreatimes.co.kr

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