Decrease in Domestic Car Sales Due to COVID-19... Capital Companies Also Worried

90% of Installment Financing is for Automobiles
Industry Introduces Program to Prevent Consumer Contraction

[Asia Economy Reporter Ki Ha-young] As consumer sentiment shrinks due to the novel coronavirus infection (COVID-19), the capital industry handling automobile installment financing is becoming increasingly anxious. While large companies are not suffering significant damage immediately, there is a possibility that small and medium-sized companies could face considerable operational setbacks if the consumption downturn prolongs.

According to the Ministry of Trade, Industry and Energy's 'February Monthly Automotive Industry Trends' on the 20th, domestic automobile sales last month recorded 97,897 units, down 18.8% compared to the same month last year. In particular, sales of domestic cars decreased by 22.0% year-on-year. The ministry estimated that about 33,000 units of domestic sales declined due to the impact of COVID-19.

As domestic automobile sales volume sharply decreased compared to the previous year, the capital industry is closely monitoring the situation. If automobile sales continue to decline, capital companies will inevitably suffer damage. An industry insider said, "90% of the installment financing products handled by capital companies are automobiles," adding, "If automobile sales keep decreasing, it will inevitably have an adverse effect on sales and other areas."

Above all, the capital industry is deeply concerned that the consumer sentiment contraction caused by COVID-19 might prolong. Considering that February is usually an off-season for the automobile industry due to large household expenditures, it is not yet a level of serious concern, but the problem changes if consumers completely close their wallets.

Another industry insider said, "It has been about a month since the rapid increase in COVID-19 confirmed cases, and we are watching to see if this consumption contraction will continue," adding, "If the economy is expected to be difficult, consumers are the first to close their wallets, so the concern is significant."

For this reason, the capital industry has introduced various programs this month to reduce the vehicle purchase burden for individual business owners. Hyundai Capital launched the 'Good Start Program' together with Kia Motors. For popular Kia models among individual business owners such as Morning, Ray, Carnival, and Bongo, the program waives monthly payments for the first six months and offers benefits such as gift cards. KB Capital and Hana Capital are implementing the 'Happiness of 10,000 Won' installment program with Korea GM. When purchasing one of Korea GM's Spark, Malibu, or Trax models, customers pay 10,000 won monthly for the first year and then pay the remaining amount in 36 monthly installments.

A credit industry official said, "If the COVID-19 situation prolongs, there is a possibility of a financial crisis, so we are monitoring the funding market and global financial markets."

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