The End of an Era

In January 2024, the automotive industry was shaken by startling news. Mercedes-Benz, the undisputed ruler of Korea’s imported car market for the past seven years, finally stepped down from the throne. The margin was a mere 698 units—a razor-thin victory—but the significance was immense.

This was not simply a poor annual performance. It was a long-running drama, an epic between a complacent monarch and a hungry challenger. How did the empire of the ’three-pointed star,’ once seemingly untouchable, lose its shine in its most loyal market?

This story is a record of not a single fatal blow but thousands of small wounds festering over time. Declining quality, neglect of customers, and a fatal misjudgment of the electric vehicle future. How could this happen? How did BMW, once shaken by quality crises, meticulously recover and claim the crown? Let’s begin this fascinating tale that redraws the map of Korea’s premium car market.

Diverging Fates: The Story Told by Numbers

A Dramatic Turnaround Seen in Data

Every story begins with an undeniable fact: the numbers. In 2023, BMW sold 77,395 units, surpassing Mercedes-Benz’s 76,697 units to claim the top spot. This marked BMW’s return to the summit after eight years since 2015. Thus ended Mercedes-Benz’s seven-year solo reign that began in 2016.

Although Mercedes-Benz’s flagship E-Class remained the best-selling imported car, the overall brand momentum clearly shifted to BMW. This throne change was not sudden. BMW had steadily narrowed the gap since 2021, making the 2023 outcome the inevitable conclusion of a two-year trend. It also meant Mercedes-Benz’s problems had been festering for a long time.

Victory Amid a Shrinking Market

What’s more surprising is that BMW’s victory came as the entire market contracted. Korea’s imported car market shrank by 4.4% in 2023 compared to the previous year. Gaining market share and reclaiming first place in such a tough environment is strong evidence that BMW’s strategy accurately read the market’s pulse. This was more than a sales battle—it was a triumph of brand resilience and strategy.

Cracks in the Three-Pointed Star: The Empire’s Collapse from Within

Mercedes-Benz’s downfall did not happen overnight. It was a structural problem arising as the brand’s most precious values—quality, trust, and customer experience—slowly eroded.

Quality Betrayal: The ‘German Engineering’ Myth Shaken

“The Best or Nothing”—this slogan long symbolized Mercedes-Benz’s perfect quality. But in recent years, this myth was severely damaged by endless recalls. Engine failures causing stalling, fuel pump issues affecting over 10,000 vehicles, software errors in over 16,000 E350 units—the scale and frequency of recalls eroded consumer trust.

The final blow was a fire incident involving the electric EQE model. The battery in the burning vehicle was made by China’s Parasis, a company previously responsible for recalling over 30,000 units in China due to fire risks with the same battery. This was a direct betrayal of the ‘Made in Germany’ pride. Consumers suspected Mercedes-Benz cut costs by using a controversial battery in the heart of its electric cars.

Arrogant Service: The King Neglected His People

As quality declined, after-sales service (AS) centers became overwhelmed. Customers faced long waits and disappointment. The ‘parts shortage’ became a notorious chronic issue among Mercedes owners.

An E300 owner waited two months for a simple part replacement and had to turn to an external repair shop. An S350 owner was denied even a loaner vehicle while waiting for parts, receiving a cold “That’s your problem” response. These cases showed that Mercedes’s AS system not only failed to solve customer inconvenience but added to their suffering.

Such complaints were not new. In 2015, a furious owner smashed his multi-billion won Mercedes S63 AMG with a golf club over repeated engine defects, shocking society. This was no mere incident but a symbolic eruption of years of festering service problems and arrogant customer treatment.

The Luxury Paradox: Profits Up, Customers Lost

Amid the crisis, Mercedes Korea adopted a puzzling strategy: focusing on ultra-luxury. Surprisingly, despite declining sales volume in 2023, Mercedes Korea recorded a record revenue of about 8 trillion won.

Matthias Beitl, Mercedes Korea’s CEO, said, “Being number one in sales is not our goal. Our goal is to strengthen our position as a luxury brand.” In other words, they chose to focus on ultra-high-end models for the wealthy rather than volume sellers. Sales of top-tier models like Maybach and G-Class hit all-time highs.

However, this ‘selection and concentration’ caused fatal side effects. While financials looked good, core customers supporting the brand’s backbone, like E-Class buyers, received a cold message: “You are no longer our priority.” It pushed away customers already disillusioned by quality and service issues.

EQ’s Great Failure: A High-Stakes Gamble on the Future

The decisive blow to Mercedes-Benz’s status was the failure of the electric ‘EQ series.’ This ambitious lineup, expected to be the brand’s future, became a symbol of strategic failure.

Design Ignoring Desire

The biggest failure of the EQ series, especially flagship EQS and EQE, was design. The pebble-shaped streamlined design chosen to reduce air resistance might have been technically excellent but emotionally alienated longtime Mercedes fans.

Mercedes’s head of design admitted EQS failed to create an “emotional bond” with core customers. He said they were “10 years ahead of the market,” which was essentially a confession of misunderstanding what their core customers wanted. S-Class drivers wanted an ’electric S-Class’ that preserved Mercedes’s dignity and heritage, not a spaceship from the future.

Out-of-Touch Pricing and Broken Trust

The exorbitant price was a problem, but worse were persistent quality issues and baffling policies. Chronic coolant warning lights, months-long repair waits, and a policy charging monthly fees for key features like rear-wheel steering angered customers who paid over 100 million won. It felt like “nickel-and-diming” to them.

Quiet Retreat: Admitting Defeat

The clearest sign of failure was Mercedes’s own retreat. They decided not to use the ‘EQ’ name for future electric vehicles and halted development of dedicated platforms for EQS and EQE successors. Production was temporarily suspended due to poor sales.

This was not just a single model failure but a costly lesson from a massive bet on the brand’s future. Meanwhile, BMW successfully launched the i5 electric 5-Series, maintaining its strong identity in the EV era. Mercedes lost sight of this essence and paid a harsh price in market rejection.

BMW’s Calculated Conquest: How the Challenger Became King

While Mercedes struggled internally, BMW advanced step by step toward the throne with a meticulous and aggressive strategy. Their success was the result of efforts across products, electrification, marketing, and infrastructure.

The Power of Choice: Relentless New Model Offensive

While Mercedes focused on ultra-luxury, BMW launched a carpet bombing of the entire market. They released over 10 new models in one year, targeting every customer segment—from high-performance M models and flagship SUV XM to compact electric iX1 and the game-changing new 5-Series. BMW’s lineup never rested.

This strategy ensured that whatever customers wanted, there was always a fresh, attractive BMW option. They monopolized market buzz and effectively filled the gap left by Mercedes.

Electrifying Driving Pleasure: The Success of the i Series

BMW’s electric strategy starkly contrasted with Mercedes EQ’s failure. They perfectly infused the brand’s core value of ‘driving pleasure’ into EVs. The flagship i5 retained the traditional 5-Series driving feel while earning praise for actual range exceeding official figures and smooth ride quality. It was not a ‘weird electric car’ but a ‘better 5-Series.’

More importantly, BMW Korea installed over 2,100 EV chargers and opened them to all EV drivers. This sincere effort to solve EV owners’ biggest inconvenience sent a strong message of long-term commitment to the Korean market.

Winning Hearts with Technology: Understanding Korea

BMW’s marketing was smart, sophisticated, and precisely tuned to the Korean market. Campaigns targeting female drivers raised the female customer ratio to 18%, breaking the “men’s car” image. Selecting K-POP icon G-Dragon as ambassador for flagship XM was a masterstroke, linking BMW to innovative, trendsetting imagery beyond just a car brand.

Even during the COVID-19 pandemic, they never stopped. They held new model launches at drive-in theaters and contactless concerts in hotel rooms, constantly engaging customers under the philosophy of “being first,” solidifying brand presence.

Ultimately, the market chose the brand that listened more, invested more, and respected customers more.

Eternal Rivals: A New Era’s Duel

The battle between the two giants is embodied in their heart models, the E-Class and 5-Series. The competition between the 11th generation E-Class and 8th generation 5-Series is a microcosm of the paths both brands are taking.

New E-Class: Glamour with Regrets

The new E-Class captivates with an interior resembling the S-Class and a massive dashboard screen. It attempts to reinterpret traditional values of “comfort and luxury” for the digital age.

But behind the glamour lie regrets. Some interior materials are rated lower than before, second-row seats are reportedly less comfortable, and base models have somewhat sluggish performance. Visually overwhelming, yet the car’s essence seems compromised.

New 5-Series: The Challenger with Everything

In contrast, the new 5-Series earned praise for remarkable balance. The most shocking change was ride comfort. Numerous reviews claimed the new 5-Series is more comfortable than the E-Class, overturning the decades-old formula of “comfortable Mercedes, sporty BMW.”

At the same time, the 5-Series retained BMW’s signature lively driving performance. Combining traditional strengths with new levels of comfort, it became a “complete sedan” appealing to a broader customer base. In this duel, BMW conquered even Mercedes’s comfort territory, taking center stage.

The Eastern Wind: Genesis as a Game Changer

Another major force fundamentally changing this fierce battle is Hyundai’s premium brand, Genesis. Korean consumers’ choices are no longer a binary between two German rivals.

The Dawn of a New Three-Way Era

Genesis quickly established itself as a true premium brand. It proved quality by ranking top in global authoritative surveys and built a distinct identity with Korean-inspired design.

Recent studies show that when Korean consumers consider premium sedans, the final contest is more often ‘Genesis vs. Mercedes’ than ‘BMW vs. Mercedes.’ Even more surprising, over half of consumers in this direct competition ultimately choose Genesis.

Genesis’s flagship G80 dominates the domestic market, leaving E-Class and 5-Series far behind. Now Mercedes and BMW must fiercely compete over the remaining market.

If Mercedes or BMW make quality or service mistakes, customers are now more likely to leave the imported car market entirely and choose Genesis instead of switching between German brands. Genesis’s presence makes every small mistake by German brands costlier than before.

Can the King Reclaim the Crown?

In conclusion, Mercedes-Benz’s fall was a self-inflicted disaster—declining quality, collapsing customer service, and a failed electrification strategy combined. Conversely, BMW’s victory was the natural result of relentless innovation and a comprehensive strategy deeply understanding the market.

Now the market’s eyes turn to the future. Mercedes vows to restore its honor by strengthening R&D in Korea and launching a new ‘dream car’ lineup. But whether it can fix the root causes of quality and service issues remains to be seen. BMW, now number one, faces the tough challenge of defending its position against a wounded but fierce Mercedes comeback and the rapidly growing Genesis.

The throne battle in Korea’s premium car market is far from over. Mercedes’s fall signals not the end of an era but the start of a new competitive age in one of the world’s most dynamic premium markets. The crown is no longer inherited by lineage but must be earned every day, every moment, through market trust.