"No Customers Even on Weekends"... Car Dealerships Operating at Half Capacity

[Asia Economy Reporter Kiho Sung] The domestic automobile market is struggling to recover from the impact of the novel coronavirus infection (COVID-19). Production is facing difficulties, but with consumer sentiment shrinking, the sales scene has virtually come to a standstill. Dealers are sighing deeply with concerns that the market is collapsing and a bleak outlook that the current situation will be prolonged.

Dealer A at an imported car showroom in Yongsan-gu, Seoul, lamented that only three groups (five people) visited the store last weekend (the 15th). He said, "This number of visitors is only about one-third compared to a normal weekday, and on top of that, we couldn't sell any cars," adding, "If weekends are like this, it's embarrassing even to talk about weekdays."

COVID-19 has also changed the scenes at sales sites. Most showrooms and vehicles are regularly disinfected, and dealers receive customers while wearing masks. Visitors are also required to use hand sanitizer and wear masks.

Nevertheless, the fear of COVID-19 is not subsiding easily. The Daegu and Gyeongbuk regions, which were hit hardest by COVID-19, are in an even more serious situation. Business owner B, who operates a domestic car showroom in Gyeongbuk, explained, "There is a Shincheonji Church, which has been in the spotlight due to this incident, right next to the showroom," adding, "People have completely disappeared from the streets around the church for several days."

Given this situation, most dealers are worried about their livelihoods. Dealers' income is mostly structured with a 'base salary' and 'incentives.' They receive a base salary of about 1 million KRW per month and then incentives per vehicle sold. Although the rates vary by company, selling one car earns an additional 1% of the vehicle price, two cars 1.2%, and three cars 1.4%.

Professor Songbyung Kim of the Automotive Dealer Department at Daekyung University explained, "Some dealers receive up to 2 million KRW as a base salary, but most receive less than 1.5 million KRW or none at all."

If a dealer fails to sell even one car, resulting in a 'baekcha' (selling zero cars in a month), they must live on the base salary of 1 million KRW for the month. Moreover, with the first quarter (January to March) performance closing soon, the pressure is even greater.

Dealer A said, "There will probably be countless dealers experiencing baekcha this month," adding, "I've been in this business for over 10 years, but this is truly the first time I've experienced this." B said, "It's hard to even say how much the cuts are. Just know that most have been drastically reduced," adding, "The March performance, when COVID-19 intensified, is even more dismal than February."

Experts point out that since this situation is unlikely to calm down easily, without countermeasures, the sales ecosystem itself could collapse. Professor Kim emphasized, "While new car sales showrooms are in a worrying situation, the used car sales market is almost completely devastated," adding, "Given various conditions, recovery within this year is hard to guarantee, and if prolonged, the slump could continue into next year, so preparation is necessary."

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