Imported cars awaiting maintenance (Image courtesy of Yonhap)
SEOUL, Nov. 9 (Korea Bizwire) – The percentage of imported passenger cars in the domestic market is anticipated to drop below 20 percent this year, marking the first decline in four years.
This decrease can be attributed to the relative success of domestic passenger car models, particularly Hyundai Motor’s luxury brand, Genesis, and the overall decrease in purchasing power due to the ongoing economic downturn.
According to data released on Wednesday by CarIsYou, an automotive market data research firm, and the Korea Association of Imported Automobiles (KAIDA), from January to October of this year the total number of new passenger vehicles registered with the Ministry of Land, Infrastructure, and Transport was 1.29 million, of which 226,602 were imported.
The share of imported passenger vehicles currently stands at 18 percent, and even with two months left in the year, it’s unlikely to surpass 20 percent on an annual basis.
Last year, the share of imported passenger cars broke the 20 percent mark for the first time at 20.1 percent.
The share of imported cars in total passenger vehicle registrations has been increasing steadily since the 2010s when various foreign brands entered the market and consumer preference for luxury vehicles grew.
In 2012, the share of imported passenger cars was 10.1 percent, rising to 12.1 percent in 2013, 14 percent in 2014, and 15.8 percent in 2015. It saw a slight dip to 14.6 percent in 2016 when the Volkswagen emissions scandal emerged.
The auto industry has also foreseen potential challenges for imported car sales if a system distinguishing vehicles costing more than 80 million won purchased exclusively for corporate use with lime green license plates is implemented starting in January of next year. (Image courtesy of Yonhap)
The share rebounded to 16 percent in 2019, followed by 16.7 percent in 2020, 19.2 percent in 2021, and 20.1 percent in 2022. However, it is expected to reverse course this year.
The reason for this year’s decline in the share of imported passenger cars can also be attributed to the improved quality of vehicles from domestic brands, especially Genesis, and their aggressive new car launches. The demand for imported cars has shifted to domestic ones as consumers realize they don’t necessarily need to own an imported vehicle.
Professor Lee Ho-geun from Daedeok University commented, “The quality and service of domestic brands such as Hyundai and Kia have improved, leading to a decreased desire for imported cars. In particular, Genesis is capturing this demand. However, the demand for high-end imported brands like Mercedes-Benz and BMW is unlikely to change significantly.”
Although the demand for eco-friendly cars is on the rise due to the decarbonization trend, the lack of preferred hybrid models in Korea is one of the reasons for the decline in market share. Another contributing factor is the burden of high interest rates on car payments.
The auto industry has also foreseen potential challenges for imported car sales if a system distinguishing vehicles costing more than 80 million won purchased exclusively for corporate use with lime green license plates is implemented starting in January of next year.
Kevin Lee (kevinlee@koreabizwire.com)
