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(LEAD) Competition heats up in small SUV market in S. Korea

All News 17:45 April 27, 2015

(ATTN: CLARIFIES time element in 6th para)

SEOUL, April 27 (Yonhap) -- The small sport utility vehicle (SUV) market in South Korea is heating up as automakers are poised to release new cars or expand supplies of existing models to carve out a bigger portion of the fast-growing sector.

The market has been growing at a fast clip this year as many consumers are choosing affordable recreational vehicles that can be more useful in diverse outdoor activities over sedans.

During the first quarter of this year, a total of 14,499 units of compact SUVs were sold in Korea, more than three times the 4,630 units sold in the same period a year earlier.

Ssangyong Motor Co., the smallest carmaker in South Korea, is leading the market with its popular Tivoli SUV launched earlier this year.

Sales of the Tivoli have been hitting on all cylinders this year with 8,037 units sold during the first quarter. It has been apparently appealing to younger people with its unique design, colors, sufficient cargo space and cheaper prices than other competing models.

Ssangyong Motor aims to sell about 38,000 units of the Tivoli this year and said the figure will likely top 100,000 in the near future.

Before the Tivoli's successful debut, the small SUV market used to be dominated by Renault Samsung Motor Co., the local unit of French automaker Renault SA. It sold 18,191 units of its popular QM3 model last year, more than double its initial sales target.

Its sales are not as strong due in part to intensifying competition from other models. A smaller supply that has fallen to a third of last year also seems to be taking a toll on QM3 sales, as it is being shipped in from plants in Spain. The number of units fell to less than 1,000 in recent months after peaking at 3,430 in November last year.

Renault Samsung plans to take back its market share from competitors by supplying around 4,000 units of the QM3 from April. It once supplied 3,900 units of the QM3 per month.

"As other automakers are joining this market with their own models, possibly chipping away at our market share, we needed to take action to meet customers' demand," a Renault Samsung official said.

The automaker still might face fiercer competition down the road, as homegrown automaking giants -- Hyundai Motor Co. and Kia Motors Corp. -- are also ramping up their drive into the market.

Hyundai Motor's all-new Tucson that includes a downsized 1.7-liter diesel engine, has drawn more than 20,000 contracts since its launch last month and some expect that April sales could reach about 4,000 units, a success considering its car segment.

Adding to the competition is the latest version of the Sportage to be unveiled in the second half of this year by Kia Motors, a smaller affiliate of Hyundai Motor.

Ssangyong Motor is also planning to unveil additional models of the Tivoli in the months to come, possibly ratcheting up competition in the market. It plans to roll out a diesel-engine model for the Tivoli in June, while unveiling its 4WD model along with a long-body model that offers additional cargo space.

"Its improved fuel efficiency along increased outdoor activities seems to be making the small SUVs a more desirable choice for consumers," said Ryu Yen-wha, an analyst at I'M Investment & Securities Co.

"The market is expected to expand further down the road, so is the competition as more automakers will likely unveil their own models to preempt the fast-growing market," he added.

kokobj@yna.co.kr
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