LIMA-Capturing a quarter of Peru's passenger car market in two years has been a wild ride for Moon Hyun Kim, Daewoo Peru's general manager.
Daewoo was an unknown brand when it drove into Peru in 1993. Then Mr. Kim, 49, designed a novel direct financing scheme that enabled consumers to buy Daewoo's Tico and Racer models in a market where consumer credit was non-existent. Peruvians flocked to the brand.
"When you introduce a new automobile, people don't want to take the risk of buying until it is proven in the market by other consumers," said Mr. Kim. "We have been successful with an unknown product."
Mr. Kim, backed by an aggressive Daewoo drive to expand sales worldwide, was encouraged to create a local marketing strategy.
Daewoo came to Peru two years late. Car sales had exploded after sweeping economic reforms in 1991, with Toyota, Nissan, Hyundai and others importing 150,000 cars, buses and trucks in two years. When Daewoo arrived, everyone who could afford to pay cash for a car-decades of high inflation had eradicated financing programs-had already bought one.
Enter Mr. Kim, a Korean native who took the reins in June 1994 and implemented Daewoo's first direct financing plan anywhere. With a $1,600 down payment (on the full price of $8,000 to $8,500) and enticing interest rates, a Peruvian car buyer can take home a Daewoo.
"To achieve rapid growth, you should take aggressive risk," Mr. Kim said. "I think it is a good adventure. And it is good business. People here don't have cash. If we provide financing facilities, it is a lot easier for consumers to buy our car."
He promoted the scheme with TV and print ads by Quorom Publicidad, Lima, using the theme "Good business with Tico." Playing on the Tico model's name, ads extolled Daewoo buyers' reactions of "FantasTICO" and "PracTICO" at being able to take a car home with only a down payment.
In a saturated car market, Daewoo's sales are running at 500 units a month, up 60% from last year, and the Korean firm has captured a 25% share of Peru's new car sales.
If imitation is the sincerest form of flattery, Mr. Kim should be thrilled to see other Peruvian marketers quickly adapting his consumer financing strategy to boost sales of blenders, stereos and refrigerators.