Audi Q8 e-tron SUV / Courtesy of Audi Korea

Audi Korea CEO Steve Cloete

Audi Korea and Volkswagen Korea are rapidly losing market presence as sales decline, driven by a shortage of new models and a lack of a clear strategy for transitioning to electric vehicles (EVs), industry officials said Tuesday.

The increasingly dominant positions of Mercedes-Benz and BMW here are adding pressure on the two Volkswagen Group subsidiaries as reflected in this year's imported vehicle sales.

According to data from the Korea Automobile Importers and Distributors Association, Audi Korea sold just 7,472 vehicles between January and October, down 51 percent from the previous year, largely due to a delayed launch of its flagship A6 sedan.

The A6 available for sale in Korea was launched in October 2019, and Audi has been selling the same model without any updates for over five years. This stands in contrast to Mercedes-Benz Korea, BMW Korea and most other luxury automakers, who frequently update their models.

Volkswagen Korea saw a sharp 15 percent drop in sales over the first 10 months of the year, with total units sold reaching just 6,675. The automaker is widely forecast not to achieve annual sales of 10,000 this year.

Such disappointing performance would have been unimaginable a decade ago, when around 30,000 Volkswagen-branded vehicles were sold annually in Korea.

Industry officials have pointed to the company's headquarters as the main factor behind the sharp decline in sales in the Korean market.

"Unlike rivals, such as Mercedes-Benz and BMW, Volkswagen Group has effectively failed to establish a clear strategy in this period of auto paradigm shift amid the rise of EVs," an official from a carmaker said.

For instance, BMW Group is adopting a dual strategy of selling both conventional vehicles with internal combustion engines and EVs, but this was not the case for Audi and Volkswagen.

While many imported vehicle brands have rushed to expand their lineups to appeal to the evolving tastes of Korean consumers, Audi and Volkswagen have fallen short in this regard.

"The two carmakers under Volkswagen Group sent an impression of caring less for the Korean market, as they have been reluctant to launch new models and failed to leave a strong brand identity for the past few years," the official said.

Former Audi Korea CEO Lim Hyun-ki assumed the role in July 2022 to much fanfare as the first Korean representative for the luxury automaker's local subsidiary. However, she was unable to complete her two-year tenure and left the position in May.

Another industry official stated that both automakers will not be able to reclaim their former success unless they make genuine efforts by introducing a more diverse and updated lineup of models.

"Overseas luxury carmakers still identify Korea as a very lucrative market due to customers' growing purchasing power, but Audi and Volkswagen are feared to keep losing their share to their rivals and home-gown carmakers without rapidly revamping its strategy here," the official said.