Support for Replacing Old Cars in the First Half of This Year Up 78%... "Tax Support for Old Cars Must Continue"

[Asia Economy Reporter Su-yeon Woo] The number of vehicles receiving tax benefits for replacing old cars in the first half of this year increased by 78% compared to the same period last year, showing that the policy implementation had a significant effect. Because of this, the automotive industry is raising its voice, saying that tax support for replacing old cars should be continuously provided to promote domestic sales.

According to the Korea Automobile Manufacturers Association on the 11th, 72,488 vehicles, a 78% increase compared to the same period last year, received government support benefits for replacing old cars in the first half of this year alone. This accounts for 7.6% of domestic sales volume in the first half and is equivalent to about 2.23 trillion KRW in sales.

In the first half of this year, the government implemented a tax support policy to promote domestic car sales, offering a 70% reduction in individual consumption tax when purchasing a new car if an old vehicle registered before 2009 was scrapped or exported. However, this was a temporary measure due to the COVID-19 pandemic and ended after a brief implementation in the first half of the year.

Number of Old Vehicle Replacements Supported by Model in the First Half of 2020 / Data = Korea Automobile Manufacturers Association

Looking at the new cars replaced with tax support for old cars by model, Hyundai Motor's Grandeur (10,672 units), Renault Samsung Motors QM6 (6,967 units), Kia Motors K5 (5,075 units), Hyundai Motor Avante (4,782 units), and Hyundai Motor Santa Fe (4,213 units) ranked in order.

By fuel type, replacements were 84.3% gasoline, 9.2% LPG·CNG, 6.5% hybrid, and 0.03% electric (including plug-in). In particular, the proportion of old cars replaced with electric or hybrid vehicles accounted for 28% of total electric vehicle sales in the first half of this year, indicating a tangible effect on environmental improvement.

With the end of tax benefits for replacing old cars and the reduction of individual consumption tax cuts, domestic car sales in July this year decreased by more than 18% compared to the previous month, and the downward trend continued in August.

On the other hand, major European countries such as Germany, France, and Italy are presenting various car purchase policies to stimulate the automobile market, which has been sluggish due to COVID-19. Germany temporarily expanded subsidies for electric vehicle purchases, and France is also expanding government support funds for replacing old cars and subsidies for electric vehicle purchases.

Additionally, old cars have poor fuel efficiency and engine performance degradation, resulting in higher pollutant emissions. The industry emphasizes the need to continue support policies for replacing old cars as a measure to solve fine dust problems. According to the Korea Automobile Manufacturers Association, old emission grade 4 and 5 vehicles account for only 18.6% of all registered vehicles in Korea but are responsible for 71.9% (31,895 tons) of the annual fine dust emissions from automobiles.

A representative from the Korea Automobile Manufacturers Association said, "The reduction of individual consumption tax has acted as the most efficient economic adjustment measure to stimulate car purchasing sentiment," adding, "We plan to propose to related ministries to expand the scope of individual consumption tax cuts (from 30% to 70%) and to reimplement tax benefits for replacing old cars to promote domestic sales."

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