From 960,000 to 410,000 Annually... 'How Did Diesel Cars Decline?'

Total Registered Diesel Vehicles Halved in 6 Years
AdBlue Shortage and Diesel Price Surge Impact
Experts Say "Eliminating Diesel Vehicles Immediately Is Difficult"

(Photo by Yonhap News) On the 23rd, diesel vehicles including tour buses were parked in a parking lot in Seoul. According to Opinet, as of the afternoon of that day, the national average diesel price was 1,997.95 KRW per liter, which is more expensive than the gasoline selling price of 1,987.94 KRW.

[Asia Economy Intern Reporter Seohee Lee] Recently, the report card for diesel vehicles has been dismal. Diesel vehicles, which once surpassed half of the total registered vehicles with 960,000 units in 2015, have rapidly declined to 410,000 units last year. This means a 57% decrease in just six years. Diesel vehicles, which once sold like hotcakes and even coined the term ‘Clean Diesel,’ have fallen from grace. Let’s look back at the history of diesel vehicles.

◆ Diesel Vehicles, Once Zooming Ahead with Eco-Friendly Policies, Suddenly Halted by Fine Dust Issues

Passenger diesel vehicles were first allowed in South Korea in 2005. At that time, diesel vehicles were limited to commercial vehicles such as buses and trucks because diesel exhaust was widely perceived to emit excessive air pollutants, including nitrogen oxides. Due to this, civic groups, the automotive industry, the Ministry of Environment, and the Ministry of Trade, Industry and Energy were in a tense standoff over the sale of diesel passenger cars.

The negative perception of diesel vehicles changed with the Lee Myung-bak administration’s ‘Clean Diesel’ policy. ‘Clean Diesel’ was a term coined by a German automaker based on the fact that diesel engines emit about 20% less carbon dioxide than gasoline engines. In 2009, the Lee Myung-bak government adopted the term ‘Clean Diesel’ to classify diesel cars as eco-friendly vehicles and provided various tax benefits to diesel car drivers, such as discounts on parking fees and congestion charges, and exemptions from environmental improvement charges. Diesel vehicles, which had better fuel efficiency, more power, and were considered eco-friendly compared to gasoline cars, soared with government support. The proportion of diesel vehicles in South Korea rose from 36% in 2005 to 43% in 2014.

The decline of diesel vehicles began just ten years later. In the late 2010s, high concentrations of fine dust emerged as a serious social issue. Experts pointed out that nitrogen oxides (NOx) emitted by diesel vehicles were one of the main culprits worsening ultrafine dust. Consequently, the government scrapped the decade-long Clean Diesel policy and announced plans to eliminate diesel vehicles in the public sector by 2030, except where no alternative models exist. The Volkswagen emissions scandal in 2015 and the BMW fire incidents in 2018 also undermined consumer trust in diesel vehicles. Consumers gradually turned away from diesel vehicles after realizing that the ‘Clean Diesel’ slogan might have been a blatant lie.

(Photo by Yonhap News) On November 3 last year, a notice of urea solution shortage was posted at a gas station in Siheung, Gyeonggi.

◆ Diesel Exhaust Fluid Crisis and Diesel Price Surge... “No Reason to Drive Diesel Vehicles Anymore”

Until then, some consumers prioritized economic benefits over environmental concerns and continued to use diesel vehicles. However, in 2021, the so-called ‘Diesel Exhaust Fluid (DEF) crisis’ occurred due to the suspension of imports from China, escalating the situation. DEF is an aqueous solution that breaks down nitrogen oxides emitted by diesel vehicles into water and nitrogen, reducing environmental pollution. Since 2019, all diesel vehicles in South Korea have been required to be equipped with Selective Catalytic Reduction (SCR) systems that use DEF.

Stable supply of DEF is essential for diesel vehicle drivers because a shortage can prevent the engine from starting or reduce power output by up to 65%, affecting driving performance. The DEF shortage last year exposed South Korea’s heavy reliance on China, which produces 97% of DEF. Consumers realized they could face inconvenience again anytime and shifted their interest to vehicles that do not require DEF. Mr. A, who has operated a Kia dealership in Seoul for ten years, said, “After the DEF crisis caused a big stir, even existing diesel drivers have been coming in to look for gasoline or hybrid cars,” adding, “Compared to before, diesel vehicles have definitely lost popularity.”

The surge in diesel prices caused by the war in Russia this year further fueled the ‘fall of diesel vehicles.’ High fuel efficiency and relatively low diesel prices were major advantages of diesel cars. However, the oil product supply shortage caused by Russia’s invasion of Ukraine and the recent diesel stock shortages mainly in Europe have diminished even these remaining advantages.

According to the Korea National Oil Corporation’s oil price information service Opinet, as of the afternoon of the 24th, the average diesel price at gas stations nationwide was 2,000.93 KRW per liter. This is the first time diesel prices in South Korea have exceeded 2,000 KRW. On the same day, the nationwide average gasoline price was 1,994.77 KRW per liter, lower than diesel. Diesel prices have surpassed gasoline prices since the 11th. The era of ‘diesel cheaper than gasoline’ is now a thing of the past.

Given this situation, consumers are saying, “There is no longer any reason to drive diesel vehicles.” Mr. B, who operates a vehicle scrapping service in Gyeonggi Province, said, “Although inquiries about scrapping have decreased due to the rise in used car prices, diesel vehicle scrapping continues steadily,” adding, “When asked why, most say they don’t see diesel prices going down and are switching to electric or hybrid cars.”

On online communities where car consumers gather, there is a mix of hope and resignation. One netizen wrote, “It’s not that diesel vehicles’ position has shrunk, but that international oil prices have temporarily affected them. Since international oil prices fluctuate, diesel vehicles’ economic benefits will revive once prices return to previous levels.” Another netizen said, “I’m one of those driving a diesel car, but filling up now costs at least 130,000 KRW. Although the fuel efficiency is good, I won’t choose a diesel car for my next vehicle.”

(Photo by Yonhap News) Hyundai Motor Group announced that it aims to achieve a global annual electric vehicle sales target of 1.7 million units by 2026.

◆ Expert: “Eliminating Diesel Vehicles Immediately Is Impossible, Policy Support Needed”

The gap left by diesel vehicles is being rapidly filled by electric and hybrid vehicles. According to the Korea Automobile Manufacturers Association, the provisional sales of eco-friendly vehicles (hybrid, electric, plug-in hybrid, hydrogen) from January to April this year reached 126,940 units, a 35.1% increase compared to 93,937 units in the same period last year. Their share of total sales rose to 24.6%, up 8.8 percentage points from 15.8% last year. Meanwhile, the share of internal combustion engine vehicles has steadily declined. Although 389,099 internal combustion engine vehicles were sold from January to April this year, their share of total sales dropped to 75.4% from 84.2% in the same period last year, a decrease of about 10 percentage points in one year.

The popularity of eco-friendly vehicles is influenced by the government’s ‘carbon neutrality’ policy, which aims to offset greenhouse gas emissions by increasing absorption to zero. In 2018, greenhouse gas emissions from the domestic transportation sector amounted to 98.1 million tons, accounting for 13.5% of Korea’s total emissions. Without reducing this, achieving carbon neutrality by 2050 is impossible. Accordingly, the government decided to ban the registration of new small diesel-powered delivery vehicles in most regions nationwide starting April 2023 under the ‘Special Act on Improvement of Air Quality in Air Control Zones.’

However, concerns have been raised about the government’s move to eliminate diesel vehicles. For livelihood commercial vehicles familiar to the public, such as Hyundai’s Porter and Kia’s Bongo, the proportion of diesel vehicles remains overwhelmingly high. Professor Jong-geon Park of the Future Automotive Department at Daelim University said, “Diesel vehicles are currently disliked, but eliminating them immediately is impossible,” adding, “Since livelihood vehicles used by many low-income people have a high diesel vehicle ratio, government policy support is necessary.”

There is also criticism that policies should be designed from a more ‘long-term perspective’ for eco-friendly vehicles to settle stably. Professor Park pointed out, “Electric vehicles may appear eco-friendly on the surface, but since Korea mainly generates electricity from coal, oil, and gas, they could actually have a negative environmental impact,” adding, “Currently, the government provides various subsidies and encourages electric vehicle purchases, but it’s uncertain when and how the policy might change. If electricity prices rise or subsidies disappear, electric vehicle owners could suddenly be stuck with worthless assets.”

Meanwhile, in July last year, Hyundai and Kia announced that from 2024, they will discontinue diesel vehicle production lines for the Hyundai Porter and Kia Bongo and instead expand production of electric and liquefied petroleum gas (LPG) vehicles.

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