The Korean luxury car market is expanding rapidly, with recent figures showing that sales in 2015 rose by over 50 percent to reach nearly 23,000 units. The report from the Korea Importers and Distributors Association also revealed that the majority of these cars are imported as wealthy Korean drivers opted to shun domestic models in favor of those from foreign brands, such as Mercedes-Benz and Audi.
With demand for premium cars rising each year, foreign car manufacturers are increasingly ramping up their localization efforts in a bid to capture a bigger share of this lucrative market. However, some firms have been slower than others in this regard, leaving local customers somewhat disappointed. One such company is Porsche, which enjoyed a 50 percent increase in sales in Korea in 2015. However, this figure could perhaps have been even more impressive if it had made a greater commitment to localization.
A report on the Business Korea website points out that Porsche’s infotainment system PCM does not support Korean, while its official website for Korean customers is predominantly written in English. Porsche recently tried to rectify the situation by offering support for Korean on the PCM in its New 911 Carrera model, but it still does not offer Korean language services in the more popular Macan or Cayenne SUV models.
Over in China, BMW has taken a more committed approach to localization after announcing plans to focus on local talent and production. Speaking at the launch of the new BMW 730Li limousines in China, Olaf Kastner, head of BMW’s China sales region, underlined the importance of the Chinese market.
He said: “BMW remains fully committed to China, the most important marketplace, in our option. We will enhance our localization strategy, from fostering local talent to local production, all centered on the approach of ‘In China, by Chinese and for China’,”
Mr Kastner added that two new models will be made in China in the first half of this year, with more than ten new vehicles set to be released in China in 2016. It is just the latest step BMW has taken to improve its localization strategy in China in recent years. The German car giant runs a joint venture with Brilliance China in the country called BMW Brilliance and operates two vehicle production plants there. In January, it opened an engine manufacturing plant in Shenyang – the first of its kind outside of Europe. Meanwhile, former BMW Brilliance vice president Liu Zhi is set to become the first Chinese president of BMW China in April as the firm continues its policy of putting local employees in important roles.
There is a marked difference between the two localization strategies of these two luxury car manufacturers. While it may be true that the quality of a product alone can ensure a certain number of sales, a firm’s perceived lack of commitment to localization can dent its reputation around the world and potentially lead to a drop in sales in the future. For Porsche, it adopted its localization strategy long after it began selling cars in Korea, and even now it can still make improvements in its approach. In contrast, BMW has invested heavily in local manufacturing plants and staff to ensure that it produces high-quality vehicles while utilizing the local knowledge base of its Chinese staff. Perhaps Porsche can look to its rival for localization tips in the future.
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