Game of Inches for Small-Car Importers Eyeing Korea

Automobile importers in Korea are pressuring the federal and local governments to change the restrictive regulations that have curtailed their small city cars’ competitiveness in the country.

The regulations pose no difficulties for the domestically produced Kia Morning (sold as the Picanto in many markets), the Kia Ray and GM Korea’s Chevrolet Spark. But they’re virtually keeping would-be competitors such as the Fiat 500 and Renault Twingo, both big sellers in other markets, out of the Korean market.

Korea’s Ministry of Land, Infrastructure and Transport sets the standard for small city cars as those with engines displacing 1.0L or less, with dimensions no greater than 142 ins. (3,600 mm) in length, 63 ins. (1,600 mm) in width and 79 ins. (2,000 mm) in height.

Foreign automakers can import their small cars into Korea, but without city-car certification they must compete against homegrown models that meet the requirements and entice buyers with many government incentives.

The federal government and major municipalities such as Seoul provide certified small city-car owners with significant benefits. They include exemption from registration fees and federal excise charges, a 50% discount on highway tolls and parking fees in publicly operated parking structures and a 10% reduction in liability insurance.

The Fiat 500, while its 0.9L engine meets the powertrain requirement, is 1.6 ins. (40 mm) too wide for certification.

Likewise, the Twingo’s 0.8L engine and its length and height meet the requirements, but at 64.6 ins. (1,640 mm) it exceeds the government’s limit on width by just 1.6 ins. (41 mm). Volkswagen faces the same dilemma with its 1.0L Up!, which is the same width as the Twingo.

Other popular foreign-made city minicars that fail to meet Korean certification standards include the Toyota Aygo, which is 5.9 ins. (150 mm) too wide, and the Citroen C1, which is 1.2 ins. (30 mm) too wide.

The only import that meets the requirement is the Daimler-Benz Smart Fortwo, but its upcoming replacement fails the width test by 2.8 ins. (70 mm).

In response to the importers’ complaints, the Ministry has commissioned a research firm to study the issue and make recommendations, sometime next year.

Locally built certified city cars have another major advantage: lower price. The Spark, for instance, sells at half the price of many of the models the importers would like to bring into the market and by far is the company’s best seller. Prices for the ’15 Spark lineup range 9 million-14 million won ($8,100-$13,000).

All but the top-of-the- line Spark model have a 1.0L 3-cyl. engine. The highest-priced model has the same 1.2L engine that is sold in the U.S.

Even if the rules are relaxed and more foreign models enter the city-car market, GM Korea is confident the Spark will maintain its domestic sales position. From January to November, the Spark sold 170,000 units worldwide, including 54,000 in Korea.

The Kia Morning/Picanto sold 86,193 units and the Kia Ray sold 28,126 domestically through November. The price range for the Morning is 8.7 million-11.7 million won ($7,800-$10,500) and for the Ray it is 11.4 million-16.4 million won ($10,240-$14,730).

GM Korea is preparing to manufacture the next-generation Spark, but will not identify its production launch date or even model-year designation.

However, a spokesman tells WardsAuto some test vehicles for the new lineup have been built. The spokesman would not comment on preparations for the Opel version of the Spark, which will be marketed in Europe as the Opel Karl.

In Europe, Opel is calling the Spark a derivative of the Karl, but in Korea the viewpoint is the reverse of that.

“The global minicar engineering team is located in Korea and we are working with the Opel team for development of a new minicar for the Opel brand,” the spokesman says.

GM Korea’s Changwon plant is running above capacity on two shifts producing the Spark. Since July it has also been producing the Damas minivan and the Labo small pickup.