hankyoreh

By Kim Kyung-rok

Hybrid cars, noted in the world automobile market for their good gas mileage and environmental friendliness, are flopping in the South Korean market.

Last year, Hyundai/Kia Motors sensed a hybrid boom and released a model in the lucrative mid-sized sedan market, but sales were dismal. Even Toyota's Prius hybrid, a powerful presence in the Japanese and North American markets, performed poorly in South Korea.

Industry observers said Wednesday that Hyundai/Kia sold just 7,193 units of its Sonata, the hybrid it launched in May 2011, and 5,279 K5 hybrids last year. The company's sales targets for the two vehicles were 11,000 and 6,000, respectively.

Observers predicted a sensation when pre-launch advance orders exceeded 2,000, but the monthly sales numbers were down to triple digits by the second half of the year. Even Hyundai/Kia's large increase last November in the warranty period for hybrid parts, from six years/120,000 kilometers to ten years/200,000 kilometers, was not enough to halt the sales slide.

The hybrid has also failed in the used car market. An all-but-brand-new Sonata hybrid (Premier) with just 1,000 kilometers on it went up for sale Tuesday at 26 million won ($22,628) on SK Encar, an online used car marketplace. The selling price was more than 10 percent lower than the new unit's after-tax price tag of 29 million won.

Im Su-gyeong, a team director for SK Encar, said, "The price reduction is higher for a used hybrid than for an ordinary gasoline-powered car because the demand isn't there."

"We're also seeing price reductions at the 21 to 26 percent range for the 2010 model Honda Insight STD and the Toyota Prius 1.8," Im said.

Industry observers and experts said the reason for hybrids' frosty reception can be attributed to consumer worries.

Daelim University professor Kim Pil-soo said, "It would be amazing if there actually were a hybrid boom right out of the gates in a market that has been dominated for more than a century by gasoline and diesel cars."

"Even in Japan, which is an advanced country when it comes to hybrid cars, it took a decade for them to start selling well," Kim explained.

Im said, "No quality defects have been discovered, but customers are still apprehensive about their durability."

"I expect demand [for used hybrids] to only increase in four to five years' time after their durability has been tested," Im added.

The analyses attributing the slack sales to customer opinions are based on the belief that there is no major problem with the quality or performance of hybrids themselves. Indeed, although the vehicles have not been on the market long, no reports have yet surfaced alledging quality defects in the two models.

The hybrids are also cost-efficient. Quotes for the YF Sonata and Sonata hybrid at a Hyundai dealership in central Seoul showed an actual purchase price difference of around three to five million won between them, tax included. At that price, customers can recover the difference within two to three years, due to the hybrid having twice the gas mileage of the ordinary model.

Samsung Securities analyst Yoon Pil-jung said, "Some of this is the effect of the appearance of an imported diesel car with good mileage in the 30 million won range, but I think the biggest thing is that the environmental friendliness aspect, one of the key aspects of the hybrid's identity, is not being played up enough."

"Given that the customers for mid-sized models don't have very deep pockets, they are having trouble coming up with a reason to pay three million more for a hybrid," Yoon explained.

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