Renault Samsung Rides QM3 to Korea Import Primacy

One year after Renault Samsung brought the Renault QM3 CUV to the Korean market, the automaker has leapfrogged the competition to become the country’s biggest vehicle importer.

The QM3 is the Korean-badged version of the Renault Captur assembled at Renault Spain’s plant in Valladolid. Its success in Korea is astounding everyone connected with the venture, but

they should have seen success coming.

The QM3 drew rave reviews and was voted Best New Car of the Show when it was previewed at the Seoul auto show in March 2013. When the production version was shown that December at its sales launch in Seoul, the full allocation of 1,000 vehicles was sold out in less than seven minutes. Advance orders were taken for an additional 4,000 units.

While the QM3 sales target for all of 2014 was set at 8,000 units, through November Renault Samsung had sold some 14,000 and had a 2-month-long waiting list for more.

Renault Samsung CEO Francois Provost says QM3 sales for the full year will reach 18,000 and the automaker in 2015 will increase allocations to shorten delivery wait times.

The QM3 has done an end run to claim leadership over the entire lineup of 19 imported vehicle brands distributed by members of the Korea Automotive Importers and Manufacturers Assn. Renault Samsung is not a member and is recognized as a domestic producer. However, in 2014 the QM3 2014 has trounced even the best-selling CUVs offered by the importers.

The group’s best-selling imported CUV is the Volkswagen Tiguan, according to KAIMA figures. It sold 7,016 units from January through November, only half as many as the QM3. Ranking third was BMW’s 520d, with 5,895 deliveries through November.

Renault Samsung attributes the QM3’s success to its good looks, the 43.5 mpg (5.4 L/100 km) fuel economy developed by its 1.5L dCi diesel engine, its $22,000 starting price and the prestige of imported vehicles in Korea.

It also has something none of the other import models have to back them up: a national network of 440 service centers, far more than any of the offshore importers. Further, prices for replacement parts for the QM3 are expected to be in line with those of domestically produced vehicles, whereas most of the importers put high markups on their service parts, sometimes exceeding by five times or more comparable parts on competing domestic models.

Provost says the imported QM3 has done so well in Korea that it may be exported by Renault to other Asian markets. He says he would consider producing the vehicle in Korea to serve those markets but has made no moves as yet.

Renault Samsung is receiving a monthly allocation of 4,000 QM3s, he says.

Provost expects Renault Samsung’s global sales will increase 25% this year, which is a given; deliveries totaled 146,201 units through November, surpassing the like-2013 global tally by slightly more than 24% and already surpassing the full-year 2013 total of 131,010.

However, the sales figures include those of the Rogue CUV that has been produced since August on a contract basis for the Renault-Nissan Alliance for export to the U.S. market.

Domestic sales for the 11 months were up 33.7% with 69,640 vehicles sold.

Even with the Rogue export vehicles included, RSM’s single assembly plant in Busan is running well below its first-stage design capacity of 200,000 units per year. When completed in 1996 by the former Samsung Motors, the plant was designed to produce 300,000 vehicles annually at full production, but was idled by the 1997 Asian financial crisis.

At the time of its pilot production launch of the original SM5 sedan (a Nissan Maxima with Samsung Motors insignia and minor modifications), Busan was said to be the world’s most electronically and robotically advanced plant. It was designed and engineered by Nissan and the original workforce trained at Nissan’s plants in Japan.

While Provost will not disclose Renault Samsung’s sales target for 2015, he makes a bold prediction that domestic sales by 2016 will exceed those of GM Korea and the company will rank third behind Hyundai and Kia.

He mentions a gain of some 70% over current levels, which surely will be needed to hit that lofty target.

For the first 11 months of 2014, GM Korea booked 136,272 vehicle sales, nearly double the 66,632 delivered by Renault Samsung, and is working hard to grow its domestic share.

Even if the Renault Samsung goal is achieved, the Busan plant would be performing below its 200,000-vehicle yearly level because the imported QM3 still would account for a big share of domestic sales.

This is definitely the year for utility vehicles in Korea, and 2015 portends more of the same, analysts say. Combined CUV/SUV sales by the five domestic automakers tallied 300,475 through November, the highest level since 2002, when 297,549 were delivered in Korea.

Leading the pack was Hyundai, which sold 123,261 utility vehicles through November, followed by Kia (86,379); Ssangyong (50,388); RSM (22,997 including both the QM3 and the QM5 that is based on the Nissan X-trail); and GM Korea (17,450).

So while it is surpassing Renault Samsung management’s expectations, the QM3 is in a market where the competition is strong and growing, and more of it is just around the corner.

Diminutive Ssangyong, in comeback mode, will launch its three-years-in-the-making Tivoli CUV in January. The sleek Tivoli is the long-awaited embodiment of the string of Ssangyong’s X100 concept cars, the last seen at the Paris auto show in October as the XIV-Air and XIV Adventure.

Sometime in the spring Hyundai will unleash its redesigned and refined Tucson CUV, a marque that already has had heady success. The new version is said to be so good-looking and laden with goodies that Hyundai USA reportedly has requested its allocation be increased by up to 100%.

So even building upon the QM3’s impressive success in 2014, Renault Samsung faces a huge marketing and sales challenge to meet CEO Provost’s goal of becoming No.3 in the Korean market by 2016.

Still, there is no question the QM3 will stay far ahead of all other imported CUVs in sales volume, and Renault Samsung will continue to be the biggest vehicle importer in Korea.