[Population Decline Hits Industry] Sports Cars for People in Their 50s? Young People Don't Buy Cars

34% of the Total Population of 17.45 Million Aged 10s to 30s
Over One-Third of Last Year's Sports Car Purchases Were by People in Their 50s

Public Transportation, Call Taxi, and Rental Car Services Improve
Youth Unemployment Soars, Reducing Purchasing Power
Demand for New Cars Expected to Decline Further with Autonomous Driving Adoption

#Park (30), an office worker living alone in Seoul, has no intention of buying a car. He is prioritizing saving money to purchase his own home and believes that after buying a house, it is better to spend on other household items rather than a car. Another office worker, Lee (28), also does not feel the need for a private vehicle. Since his workplace is in Seoul, he finds using public transportation more convenient. When he occasionally needs a car on weekends, he uses car-sharing services or borrows his parents' car.

#The sight of elderly gentlemen with white hair driving brightly colored sports cars is no longer unusual. Porsche sold 566 authentic sports cars such as the 911 and Boxster from January to November last year, and more than one-third of these, 211 units, were purchased by customers aged 50 and above. Ten years ago, customers aged 50 and older accounted for only about 17%. Older gentlemen are buying sports cars more than young people. This phenomenon has emerged due to the population decline and the decrease in young people.

Italian sports car brand Ferrari Portofino
[Photo source: Yonhap News, Reuters]

Declining Youth Population... "Buying Fewer Cars"

Nowadays, young people buy fewer cars. The consumption pattern of purchasing a car before or after employment or marriage and upgrading to bigger or more expensive cars as income rises has become a thing of the past. The social atmosphere that regarded private cars as essential has also changed. Car manufacturers' marketing methods and new car development approaches have shifted accordingly.

Due to the low birthrate, the absolute number of young people has shrunk. According to government statistics, ten years ago, the population aged from teens to 30s was 20.83 million, accounting for over 40% of South Korea's total population. This year, the population in the same age group is 17.45 million, about 34% of the total.

As the population decreases, vehicle purchases are also declining. According to the Korea Automobile Mobility Industry Association's data on new car registrations by age group, young people aged 30 and under purchased 436,843 new cars in 2015, accounting for about 29% of all new car registrations that year. Until a few years ago, young people bought about 3 out of every 10 cars sold annually in South Korea. However, this number dropped to 293,992 in 2022 and 275,601 from January to November last year. In terms of proportion, it shrank to 20%.

The bigger issue is that new car demand has decreased more than the decline in the youth population. When comparing new car purchases per 1,000 people by age group, the 30-and-under group bought 59.3 cars per 1,000 people annually until 2015. This figure steadily declined to 44.9 in 2022 and 42.6 last year. In the past, the completed car industry considered the 30s age group (30-39 years old) as the most active in new car demand. Due to aging and other factors, this age group has also increased. Last year, new car demand per 1,000 people was 30.0 for those in their 40s and 30.7 for those in their 50s, surpassing the 30s group (29.4 per 1,000) for the first time. The conventional wisdom of automobile marketing is changing.

The total number of cars sold annually in South Korea has remained around 1.5 million units (including passenger, cargo, and special vehicles) since 2015. In 2020, when revenge spending surged due to COVID-19, sales exceeded 1.6 million units, and despite production difficulties caused by parts shortages last year, about 1.42 million units were sold. However, new car consumption among young people continues to decline. Considering the shrinking population, long-term car sales are likely to fall below 1 million units.

"More Alternatives, Rising Prices"

The decrease in new car purchases among young people is the result of various complex factors. First, as urban population concentration increases, alternative transportation options such as public transit effectively replace private cars. Not only have traditional public transportation systems like buses and subways become more comprehensive, but IT advancements have also made ride-hailing easier. Accessibility to ultra-short-term vehicle rental services such as rental cars and car-sharing has improved significantly. More people now find owning and maintaining a car more inconvenient than not having one.

The industry also sees the impact of rising new car prices combined with weakened consumer sentiment among young people. Although youth unemployment rates soared above double digits in the mid-2010s and have since declined, temporary and daily jobs have increased significantly. The number of young people not seeking jobs, who are not counted in unemployment statistics, has also risen compared to the past. Since cars are among the most expensive goods individuals purchase, thinner wallets naturally lead to reluctance in buying new cars.

A representative from the completed car industry said, "With increasing burdens from student loans and real estate mortgages, young people's purchasing power has likely decreased compared to the past. In the past, some bought cars for show, but now, with a focus on rational consumption, automobile purchases have declined."

"Completed Car Industry Also Changing Its Response"

Traditionally, young people have been the main marketing target for completed car companies. This was to create a lock-in effect by binding customers to the brand they first purchased. Each manufacturer promoted entry-level models with lower costs as representative models for this reason. Vehicles were categorized by size and engine displacement, and marketing was tailored by age group accordingly.

A representative example is Hyundai's PYL marketing about ten years ago, which introduced hatchback models like the Veloster and i30 targeting people in their 20s and 30s. This marketing lasted less than five years before disappearing into history. A Hyundai official said, "Rather than developing new cars targeting young people, we minimize development costs and risks by releasing high-performance derivative models based on existing vehicles. This is one of the reasons behind launching models like the Avante N and Ioniq 5 N."

Industry insiders predict that as autonomous driving technology becomes widespread in the mid to long term, new car demand will decrease further. When cars can drive themselves, it is much more efficient to summon a car when needed rather than owning one. This is the point Tesla is targeting. Car owners share their vehicles through a platform and earn income. Leading global completed car companies such as Hyundai with Motional and General Motors (GM) with Cruise are partnering with external firms to refine autonomous driving technology and strengthen platform businesses, reflecting this trend.

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