Last Year Vehicle New Registrations Decreased by 1.8%... Market Size Shrinks for Second Consecutive Year

Jung Manki, Chairman of the Korea Automobile Manufacturers Association / Photo by Kang Jinhyung aymsdream@

[Asia Economy Reporter Kiho Sung] Last year, the number of new car registrations in South Korea decreased by 1.8% compared to the previous year. The market size has shrunk for two consecutive years. Domestic cars decreased by 0.9%, but imported cars, mainly from Japanese and German brands, fell by 6.0%, dropping below the 1.8 million units maintained over the past four years.

On the 10th, the Korea Automobile Manufacturers Association announced these findings through the '2019 New Car Registration Status Analysis' report, which analyzed demand characteristics by vehicle type, fuel type, and buyer age group in the domestic car market.

Consumer car purchasing behavior showed clear changes by vehicle type, fuel type, and buyer age group. First, preference for Sports Utility Vehicles (SUVs) continues to rise. SUVs increased by 7.2%, supported by expanded lineups by class and fuel type beyond the traditional mid-size and diesel models, satisfying diverse demand, and their market share reached a record high of 45.1%.

Secondly, due to strengthened emission regulations, diesel car sales plummeted by 17.2%, and for the first time since 2013, gasoline car sales surpassed diesel car sales.

Next, the electric-powered vehicle market expanded significantly, supported by government subsidies and an increase in model variety. Hybrid, electric, and hydrogen fuel cell vehicles increased by 11.8%, 12.2%, and 474.7%, respectively, resulting in a total electric-powered vehicle sales increase of 14.6% to 143,000 units. Their market share rose from 6.8% in 2018 to 8.0% in 2019. Among these, hybrids sold 104,000 units in 2019, pushing the total domestic stock to over 500,000 units (506,047 units). Electric vehicles sold 34,956 units, bringing the total stock close to 90,000 units (89,918 units). Hydrogen fuel cell vehicles sold 4,195 units, surpassing a total stock of 5,000 units (5,083 units).

By age group, while those in their 30s and 40s decreased, the 50s age group emerged as the largest buyer segment. Additionally, corporate and business purchases increased by 1.3% compared to the previous year in 2019, reaching a record high share of 27.6%, reflecting diversified car usage patterns.

Meanwhile, among imported cars, diesel emission regulation tightening and the boycott of Japanese products caused German brands to decrease by 4.5% and Japanese brands by 18.6%, while only American brands increased by 5.4%.

By country of origin, Germany, the United States, and Japan all saw declines, whereas Chinese imports surged by 71.9%, from 1,513 units in 2018 to 2,601 units last year, mainly due to Volvo’s China-produced passenger cars and electric buses.

Jung Manki, president of the Korea Automobile Manufacturers Association, stated, “Considering the trend of domestic demand toward premium and differentiated products, it is necessary to strengthen our companies’ product development capabilities. However, since the labor cost ratio relative to sales is too high in our companies, limiting R&D capacity, it is necessary to raise labor costs with consideration for expanding R&D capabilities in the future.” He added, “The government should also provide tax support for R&D investments at least comparable to major competing countries to help expand our companies’ R&D capabilities.”

He continued, “Furthermore, since our companies are experiencing more difficulties from COVID-19, such as production disruptions and domestic demand contraction compared to major competitors, it is necessary to allow extensive special extended work hours, introduce flexible working hours, permit dispatch and substitute labor, and promote non-regular employment until these challenges are overcome.”

According to the Automobile Manufacturers Association, in 2018, the wage ratio relative to sales was 12.1% for the Korean automotive industry, 10.0% for Germany’s Daimler, and 5.9% for Japan’s Toyota. The R&D ratio relative to sales was 3.1% for the Korean automotive industry, 5.4% for Germany’s Daimler, and 3.5% for Japan’s Toyota, indicating that our companies’ R&D capabilities are weaker compared to major competitors.

This content was produced with the assistance of AI translation services.