"Desperate to Overcome Crisis"... Automobile Industry Association Requests Expansion of Individual Consumption Tax Reduction Rate

[Asia Economy Reporter Kiho Sung] The Korea Automobile Manufacturers Association has requested the National Assembly to expand the reduction rate of the individual consumption tax. Considering the decreased effect on domestic demand stimulation due to the reduction of the individual consumption tax cut rate (from 70% to 30%) and the ongoing difficulties faced by the automobile industry caused by COVID-19, the association urged the prompt passage of the bill related to the 70% individual consumption tax cut currently pending in the National Assembly.

On the 15th, the Automobile Manufacturers Association stated, "Since July, when the government reduced the individual consumption tax cut rate, domestic demand has faced a decline, with a 18.2% decrease in July and 22.5% in August compared to the previous month," adding, "In the export market, foreign competitors who had been struggling have now fully resumed production and sales, causing difficulties for domestic companies." This was the content of their recommendation.

According to the Automobile Manufacturers Association, sales of Korean brands in the U.S. market increased by 13.6% in August this year, achieving a market share of 8.8%. However, in September, as overseas competitors resumed normal operations and sales, the market share fell back to 8.3%.

Analyzing the effect of the individual consumption tax cut, domestic car sales decreased by 18.2% (-40,558 units) compared to the previous year during the two months before the 70% tax cut. However, after the 70% individual consumption tax cut, sales increased by 15.9% (+85,021 units) compared to the same period last year. In terms of value, sales increased by approximately 2.6178 trillion KRW, indicating that the 70% individual consumption tax cut had a decisive impact on stimulating domestic demand.

Jung Manki, Chairman of the Korea Automobile Manufacturers Association, stated, “As global automakers have recently normalized operations and competition in the export market has intensified, our companies may continue to face crises. Therefore, until the crisis caused by COVID-19 is fully resolved, stimulating domestic demand through the 70% individual consumption tax cut is urgently needed.”

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