New Car Prices Soar... Rental Cars and Used Cars Also Increased

Impact of Raw Material Price and Insurance Premium Increases

[Asia Economy Reporter Yoo Hyun-seok] Long-term rental car costs and used car prices have risen. The main reason is attributed to automakers raising new car prices due to increases in raw material costs.

According to the automotive industry on the 25th, Lotte Rental's long-term rental monthly fee for the second quarter of this year was 566,876 KRW, up 1.22% from 560,037 KRW last year and 2% compared to 2020. Along with this, short-term rental prices also continuously increased, rising from 37,017 KRW per day last year to 38,864 KRW. Another company, SK Rent-a-Car, also raised its long-term rental prices in June.

This is interpreted as being due to the increase in vehicle selling prices caused by rising raw material costs. In the case of Hyundai Motor Company and Kia, the average selling price of domestic cars increased this year. For Hyundai, the average selling price of passenger cars slightly decreased from 47.59 million KRW last year to 47 million KRW, but for recreational vehicles (RVs), it rose by more than 3.5 million KRW from 42.38 million KRW to 45.92 million KRW. Kia's passenger cars slightly increased from 33.7 million KRW to 33.84 million KRW, and RVs also jumped by more than 1.5 million KRW from 41.31 million KRW to 42.74 million KRW, showing a significant rise in RV prices.

Insurance companies' increases in commercial vehicle insurance premiums also seem to have had an impact. In May, non-life insurance companies raised insurance premiums for commercial vehicles such as rental cars, some cargo trucks, delivery vehicles, and personal taxis by 1.8 to 4.5%. A rental car company official said, "Basic factors such as changes in vehicle model years or partial updates affect price increases," adding, "Recently, logistics costs and insurance premium hikes are also causes."

Used car prices are also on the rise. Lotte Rental's used car resale price increased from 11.887 million KRW in 2020 to 13.078 million KRW last year and 13.681 million KRW in the second quarter of this year. Additionally, K Car's average retail selling price of used cars in the first half of this year rose 15.8% year-on-year to 16.85 million KRW, indicating an increase in used car selling prices.

In particular, the recent growing popularity of RVs instead of passenger cars has also influenced used car prices. Since RVs have higher selling prices compared to passenger cars, the share of recreational vehicles such as sport utility vehicles (SUVs) accounted for 51.7% of domestic sales among five major automakers in the first quarter. This is a 5.3 percentage point increase compared to the same period last year. A used car company official explained, "Models like SUVs have high new car prices, which leads to an increase in used car prices as well."

An industry insider said, "Both rental cars and used cars inevitably link to new car prices," adding, "As new car prices rise, the prices of these vehicles are also likely to increase."

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