Car Sales Decreased Last Year but Revenue Increased... "Impact of More High-End Vehicles"

Car Sales Volume of 1.735 Million Units Last Year... 9% Decrease YoY
Sales Amount of 76.599 Trillion Won... 1.8% Increase YoY

[Asia Economy Reporter Hyunseok Yoo] Although domestic car sales decreased compared to the previous year, sales revenue increased last year. This is interpreted as a deepening trend of overall vehicle price increases and demand for luxury vehicles.

On the 6th, the Korea Automobile Manufacturers Association (KAMA) reported in the '2021 New Vehicle Registration Status Analysis' that last year's car sales volume was 1,735,000 units, a 9.0% decrease from the previous year, which had recorded the highest ever sales. This decline is attributed not only to the reverse base effect from 2020, when new car purchase demand was brought forward due to tax reductions and revenge buying, but also to delivery delays caused by supply chain disruptions.

Both volume and value of domestic cars decreased. Sales volume dropped 11.1% year-on-year to 1,424,990 units, and sales revenue fell 3.7% to 52.121 trillion KRW. In contrast, imported cars showed growth, recording 309,000 units sold, a 2.3% increase. Particularly, sales revenue increased by 15.7% to 24.478 trillion KRW. The market share based on sales revenue reached 32%, surpassing 30% for the first time.

Sales revenue reached a record high last year. Total sales revenue was 76.599 trillion KRW, up 1.8% from the previous year. This is interpreted as a result of intensified demand concentration on luxury vehicles such as imported cars, large SUVs, and electric vehicles. Sales of ultra-luxury imported car brands like Rolls-Royce, Bentley, and Ferrari reached 1,542 units, a 25% increase from the previous year, marking the largest scale ever. Among these, 85% were purchased by corporations and businesses.

Electric-powered vehicles saw their market share by volume increase by 6 percentage points from 10.8% in 2020 to 16.9% in 2021, due to market expansion following government policies and regulatory changes, as well as diversification of models released by manufacturers. Alongside this, sales volume of large SUVs increased by 5.4% compared to 2020. This is attributed to the recent expansion of new large SUV models and changes in consumer behavior such as increased domestic travel.

By imported car brand, German and American brands recorded their highest ever sales, with sales volume increasing by 2.6% and 6.4% respectively compared to the previous year. Although sales volume of Chinese-made cars is small, the diversity is expanding with not only low-priced vehicles but also luxury models like the BMW IX3 produced in Chinese factories, continuously increasing their market share in Korea.

Jung Manki, Chairman of KAMA, explained, "The recent rapid growth in sales of high-priced imported cars such as supercars is partly due to tax support for corporations and businesses," adding, "To resolve the side effects of misuse, it is necessary to supplement the system, such as setting an upper limit on vehicle prices when recognizing business-use passenger car expenses."

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