"No Car Purchase"… Domestic Vehicle Purchase Intention Index Hits All-Time Low

In March, the domestic Vehicle Purchase Intent (VPI) index fell below the baseline for the eighth consecutive month, marking an all-time low. This was due to weakened consumer sentiment caused by high inflation and high interest rates, as well as rising raw material prices that increased new car prices.

On the 28th, Deloitte Korea Group announced the 'March 2023 Vehicle Purchase Intent Index (VPI Index),' which surveyed consumers by country regarding their intention to purchase vehicles. The VPI index surveyed over 1,000 consumers aged 18 and older in 24 countries worldwide.

The domestic VPI index in March this year stood at 69.8, the lowest level since February (62.6) and October 2022 (63.7). Compared to the same month last year, it dropped by 26.9 points. Including the March index, it has remained below the baseline (100) for eight consecutive months. This index quantifies the proportion of consumers intending to purchase a vehicle within six months. A value above the baseline (100) indicates an increase in purchase intent, while below indicates a decrease.

Domestic VPI Index [Source=Korea Deloitte Group]

Deloitte analyzed that the continuous low VPI index was mainly influenced by rising raw material prices, the premiumization of parts, and price increases of new cars due to electrification transitions. The scale of semiconductors required for new vehicles has increased due to autonomous driving and vehicle premiumization and electrification. Major raw material prices for vehicles have also risen significantly over the past two years. In particular, aluminum prices rose 59% from $1,704 per ton at the end of 2020 to $2,703 in 2022, and copper prices increased 42% from $6,181 per ton at the end of 2020 to $8,797 at the end of 2022.

According to the business reports published in March this year by Hyundai Motor and Kia, the price of Hyundai passenger cars rose from 47.58 million KRW per vehicle in 2021 to 50.31 million KRW in 2022, while Kia passenger car prices increased from 33.65 million KRW to 34.31 million KRW during the same period.

In this survey, 24% of domestic consumers cited "wanting the latest features and performance equipped in new cars" as a direct factor in purchasing a vehicle. This was followed by "high maintenance and repair costs of currently owned vehicles (19%)" and "wanting a vehicle from another company or a different model (16%)." These results show a shift in purchase motivation rankings compared to the February survey, where "wanting a vehicle from another company or a different model" accounted for the largest share (21%).

Additionally, among household financial factors considered by consumers when purchasing a car, "postponing plans to purchase high-priced items (53%)" remained the top response, followed by "concerns about depleting current savings (50%)."

Kim Taehwan, Automotive Industry Leader at Deloitte Korea Group, said, "Although vehicle purchase sentiment has slightly revived in the global market, the overall vehicle sales market remains rigid both in Korea and globally due to high interest rates and worsening household economies. Automakers need to clearly understand the consumer sentiment of those willing to purchase and establish systematic sales strategies."

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