Newcomers motor into Europe: South Koreans could soon rule the road, warns Russell Hotten

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The Independent Online
EUROPEAN car makers who still fear the Japanese threat will have even more to worry about at the British Motor Show, which begins this week in Birmingham.

South Korean manufacturers will be there in force, some exhibiting for the first time, but all with bigger stands and even bigger promises to be among the world's top 10 car producers by the next decade.

Their ambition for greater penetration of the European market is no idle threat, says Alan Pullen, director of the National Franchise Dealers Association.

He points to the determination of Daewoo, a first-timer at the Motor Show, which hopes Britain will be a springboard for European expansion. The company, South Korea's second-biggest car maker and the world's 33rd largest industrial group, has launched a multi- million-pound UK marketing campaign.

Its line is: 'The biggest car company you've never heard of.'

Mr Pullen said: 'We have all under-estimated the South Koreans. The country is progressing on a variety of industrial levels, and for the car industry Europe is the target.' The cars were of Japan-build quality and price, he said.

Other South Korean manufacturers - Kia, SsangYong and Hyundai - are among the most efficient producers in the world. Their recent, but highly successful emergence on to the world motor industry scene has been due to close collaboration with Mitsubishi, Mercedes and General Motors.

Kia will this week announce plans to develop a range of engines with Rover.

But the South Koreans are also branching out with their own models.

Annual output by South Korean car makers is estimated to rise to 4 million by 2000, putting them behind the US, Japan and Germany. In addition, Samsung is investing dollars 5bn to start up car production.

Like the Japanese before them, the Koreans' drive for European sales will cause trade conflict. European producers are already annoyed at their restricted access to Korean markets. Last year only 300 European cars were sold in Korea. On Friday, Michael Heseltine, President of the Board of Trade, led a delegation of businessmen to Korea and Malaysia. The issue of car exports was expected to be high on the agenda.

Hyundai wants to increase vehicle production of 900,000 in 1993 to 2 million by the end of the decade. Its new Accent small car, on show in Birmingham, will be behind a planned doubling of Hyundai's sales in Europe to 200,000 by 2000.

Daewoo, whose Nexia competes against Ford's Escort, aims to sell 20,000 vehicles a year in Britain by 1987, about 1 per cent of the market. It is an ambitious target, but not unattainable, say rivals. Daewoo has already shaken the traditional retailing network with plans to by-pass independent dealers and sell direct. It is opening 30 superstores, with cafes and nannies to look after the children of prospective buyers.

Kia, which began making cars only 20 years ago, increased exports to Europe by 55 per cent in the first seven months of this year to 13,300 vehicles. It wants to export 35,000 next year.

'Expansion is necessary to survive and grow. We hope to become one of the world's top 10 producers by the year 2000,' Han Seung-joon, Kia's president, has said.

The company has invested heavily in tailoring vehicles to European tastes, and five new models will be on show in Birmingham. SsangYong, in which Daimler-Benz has a 5 per cent stake, is entering the British market with a four-wheel-drive vehicle. SsangYong has just begun a dollars 500bn investment to increase production capacity.

(Photograph omitted)