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What`s stopping Korea from developing high-end sports cars?

What`s stopping Korea from developing high-end sports cars?

Posted October. 25, 2012 04:25,   


Ahead of the Oct. 13 Formula 1 race at the Korea International Circuit in Yeongam County, South Jeolla Province, a sports car began running the racetrack puffing out exhaust sound from a V8 engine.

The Mercedes Benz SLS AMG GT, the official safety car that launches in emergency situations in an F1 race, has a maximum output of 591 horsepower and is one of the most powerful Benz models in performance.

While this super car attracted the eyes of F1 spectators, news that the production of the Spirra by Oullim Motors, Korea`s first super car, has been suspended. Just 30 units has been sold since the car`s release in 2010, and the manufacturer is on the brink of being delisted on the stock market. The fate of the country`s first super car proved short-lived.

Foreign carmakers, on the other hand, are locked in a growingly fierce competition to develop high-performance sports cars. Professional sports carmakers and general carmakers such as Toyota and General Motors are rushing to launch iconic sports cars that enhance their brand image.

Korea was ranked among the world`s top five carmaking countries for the sixth straight year with output of 4.27 million cars in 2011. But the country has yet to develop high-performance models.

Hyundai Motor launched the sports car model Genesis Coupe, which has long way to go before it can compete with world leaders in performance and authenticity.

How huge are the effects of investing in super cars? Is it difficult for Korean carmakers, which have grown with cheap and mid-level performance cars, to develop higher-end models for sport?

With horsepower of more than 500, super cars entail huge development costs and deficits in their production. Nevertheless, leading global carmakers are aggressively developing such vehicles because of the belief that they bring huge intangible profits, including enhanced brand image and technological power.

About 300 billion (272 million U.S. dollars) to 400 billion won (362 million dollars) are needed to develop a general-purpose car. Development of a high-performance sports car demands costs 50 percent to double more, though carmakers are reluctant to release precise data.

Few carmakers make huge profits by selling high-performance sports cars, and most of them run up deficits except for famous sports car brands such as Porsche, Ferrari and Lamborghini. This is because general carmakers have to start making sports cars from scratch and very few units are sold.