Last Year’s Car Exports and Production Declined... Eco-Friendly Cars Achieve Record Highs in Exports and Domestic Sales

Finished cars are waiting in the yard of Hyundai Motor Company's Ulsan plant. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] As the novel coronavirus disease (COVID-19) became a global pandemic, both exports and production of the domestic automobile industry declined last year. However, exports and domestic sales of eco-friendly vehicles reached record highs.

According to the Ministry of Trade, Industry and Energy on the 14th, automobile industry production last year fell by 11.2% compared to the previous year, and the number of exported vehicles decreased by 21.4% (export value down 13%). Domestic sales increased by 5.8% due to factors such as the reduction of individual consumption tax.

The number of exported vehicles was 1.89 million units, down 21.4% from the previous year. Major markets such as the United States and the European Union (EU) were hit hard as they imposed shutdowns and lockdowns due to the impact of COVID-19.

Production volume decreased by 11.2% from the previous year to 3.51 million units. The contraction in sales and disruptions in the supply of key parts due to COVID-19 had an impact. In February last year, the supply of wiring harnesses became unstable, and by the end of May, production disruptions occurred at Kia's Sohari plant, Gwangju Plant 2, and GM.

However, as other countries suffered greater damage than South Korea, the production ranking rose two places from 7th to 5th in the world. Only China (-3%) had a lower decline rate than South Korea, while the United States (-20.8%), Japan (-17.5%), and Germany (-28.2%) experienced higher declines.

Source: Ministry of Trade, Industry and Energy

Meanwhile, domestic sales increased by 5.8% to 1.89 million units, achieving the highest sales ever. A Ministry of Trade, Industry and Energy official explained, "Government policies to stimulate domestic demand such as the reduction of individual consumption tax and various new car launches by the industry had an impact." While major countries like the United States and Japan all showed declines, only South Korea showed an increase.

Demand for sports utility vehicles (SUVs) such as the Palisade, Sorento, and Tucson continued to rise. Recreational vehicles (RVs) accounted for 52.3% of total passenger car sales. Among imported cars, sales of American, German, and Swedish brands increased.

Eco-friendly vehicles such as electric cars recorded record performances in both exports and domestic sales. The number of exported eco-friendly vehicles increased by 6.8% from the previous year to 276,000 units, setting an all-time high. The share of eco-friendly vehicles in total exports was 14.7% by volume and 19.1% by export value.

Notably, the export volume of electric vehicles increased by 60.1% (121,825 units sold). By model, the Kona EV increased by 43.6%, the Niro EV by 191.9%, the Niro PHEV by 25.8%, and the Nexo by 26.3%, leading the strong export trend.

With increases in hybrid vehicles, electric vehicles, plug-in hybrid vehicles, and hydrogen vehicles, domestic sales of eco-friendly vehicles rose by 58.7% from the previous year to 227,000 units. The share of eco-friendly vehicles in domestic sales was 12%, surpassing 10% for the first time last year.

In December last year, production, domestic sales, and exports all shrank. Production volume was limited to 296,895 units, down 12% from the previous year, due in part to a partial strike by the Kia labor union.

Domestic sales fell by 6% to 163,980 units. A Ministry of Trade, Industry and Energy official said, "The reduction of individual consumption tax was extended for six months from January to June this year, so the early demand at the end of last year decreased, causing the decline in domestic sales."

Exports dropped to 174,904 units, down 14.6% compared to the same month last year, due to a global decrease in demand as COVID-19 resurged in major countries such as Europe and the Middle East.

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