Auto Market Faces Worst Year Since 2013 Amid Weak Consumer Demand | Be Korea-savvy

Auto Market Faces Worst Year Since 2013 Amid Weak Consumer Demand


In 2024, used car sales in South Korea reached 2.428 million units, showing a smaller decline of 0.6% compared to new car sales. The image depicts a scene from a used car market in the country. (Yonhap)

In 2024, used car sales in South Korea reached 2.428 million units, showing a smaller decline of 0.6% compared to new car sales. The image depicts a scene from a used car market in the country. (Yonhap)

SEOUL, Jan. 24 (Korea Bizwire) — South Korea’s domestic auto market saw its weakest performance in over a decade in 2024, with new car sales hitting their lowest level since 2013, according to a report released by the Korea Automobile & Mobility Industry Association (KAMA) on Thursday.

The report revealed that 1.635 million new vehicles were sold last year, a 6.5% decline from 2023. Domestic brands experienced a sharper drop of 7.3%, with 1.346 million units sold, while imported car sales fell 2.5% to 288,000 units. Despite declining sales, the average purchase price of new vehicles rose 2.3% year-over-year to 50.5 million won.

Declining Consumer Confidence and Economic Pressure

The downturn was attributed to weakened consumer sentiment, particularly among economically sensitive groups such as small business owners and younger demographics.

Rising household debt, the expiration of new car purchase incentives, and slowing demand for electric vehicles (EVs) were highlighted as key factors. Many consumers turned to the more affordable used car market, where sales dropped only 0.6%, reaching 2.428 million units.

Commercial Vehicle Sales Plunge

The decline was particularly severe in commercial vehicles, with sales falling 21.4% year-over-year to 205,000 units. One-ton diesel trucks, often used by small businesses, saw sales plummet by 26.3%. The introduction of pricier, eco-friendly models failed to capture demand due to their higher costs and limited charging infrastructure.

Hybrid Vehicles Thrive Amid EV Slowdown

While sales of internal combustion engine vehicles and EVs declined overall, hybrid vehicles experienced robust growth. Full hybrid vehicle sales (excluding mild hybrids) surged by 29.2% to 389,000 units, accounting for 23.5% of total vehicle sales—a significant milestone for the segment.

In contrast, battery electric vehicle (BEV) sales dropped 9.7% to 147,000 units, though electric passenger car sales rose 5.9% to 122,000 units, buoyed by new model launches. The average price of electric passenger cars fell by 17.2%, driven by increased sales of budget-friendly models like the Tesla Model Y and Kia EV3.

This photo shows a hybrid vehicle at a parking lot in Seoul. (Image courtesy of Yonhap)

This photo shows a hybrid vehicle at a parking lot in Seoul. (Image courtesy of Yonhap)

Policy Recommendations

KAMA Chairman Kang Nam-hoon urged the government to implement measures to stimulate demand, including extending temporary consumption tax cuts and accelerating tax incentives for replacing older vehicles.

He also emphasized the need to expand research and development tax credits for EVs and increase subsidies per vehicle to counter the growing presence of Chinese brands in the domestic market.

With a sluggish 2024 behind it, the South Korean auto industry faces mounting pressure to adapt to shifting consumer preferences and economic challenges while preparing for a more competitive landscape in 2025.

Kevin Lee (kevinlee@koreabizwire.com) 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>