A recent trend in South Korea’s auto industry is the rise in demand for pre-owned vehicles certified by import carmakers largely due to surging overall sales of the sector.
Certified pre-owned vehicles are used vehicle that have been inspected, approved and guaranteed by the manufacturer, and the concept has worked to break the stigma of poor quality attached to used cars, boosting popularity of such vehicles here.
“As import car sales continue to increase, more import carmakers will start CPO programs to retain the residual value of their vehicles,” said Lee Ho-geun, professor of automotive engineering at Daeduk University.
Korea’s import car market is expected to grow some 9 percent to 256,000 units in 2018 from 235,000 units for 2017, according to the Korea Automobile Importers and Distributors Association.
Among import carmakers, BMW was the first to introduce the system for Korean drivers, in 2005. It has since been joined by at least nine other import carmakers -- Mercedes-Benz, Audi, Volkswagen, Jaguar Land Rover, Lexus, Porsche, Infiniti and Ferrari -- with Volvo preparing to launch one soon.
BMW Premium Selection showroom in Cheonan, South Chungcheong Province (BMW Korea)
Carmakers said the upside of running CPO service is they can hold on to customers by purchasing their used cars and leading them to buy a new one.
CPO vehicles are usually 10 percent more expensive than similar used cars sold through different channels, the original manufacturer’s guarantee appears to be a strong factor appealing to consumers.
“Import cars used to be associated with flamboyancy, so the majority of executives and companies in Korea chose to lease cars made by local carmakers. But with changing societal views and shortened lease periods, Korea’s CPO vehicle market will expand further,” Lee said.
BMW Korea sold 9,419 units of CPO cars between January and November last year, compared to 6,900 units in 2016, according to the company.
The carmaker resells certified accident-free used BMW cars that have been on the road for less than 5 years or 100,000 kilometers through the BMW Premium Selection after examining them across 72 categories.
It currently runs 16 BMW Premium Selection showrooms nationwide.
Mercedes-Benz Korea follows with sales totaling 8,286 units from January to November 2017.
Seeking to catch up with BMW Korea, Benz opened three new showrooms for certified pre-owned vehicles last week, totaling 19 showrooms nationwide
Gearing up to resume sales here, Volkswagen Korea started a certified used car program named VW Approved October last year.
Jaguar Land Rover Korea operates 12 showrooms for its CPO vehicles nationwide, among which five were newly opened in 2017.
Korea’s overall used car market hiked 38.4 percent to 3.7 million units in 2016 from 2.7 million in 2010, according to data from the Korea Automobile Manufacturers Association.
By Kim Bo-gyung(email@example.com