Domestic Auto Production to Rebound Next Year After Three Years... 16 New Models to Drive Growth in Domestic Sales and Exports

Expansion of EV Subsidies and Increased Demand for Replacing Aging Vehicles

Next year, domestic automobile production is expected to reach 4.13 million units, an increase of 1.2% compared to this year, marking a turnaround to growth after two consecutive years of decline.

According to the Korea Automobile & Mobility Industry Association’s report, “2025 Automotive Industry Assessment and 2026 Outlook,” domestic sales are projected to reach 1.69 million units next year, up 0.8% from this year. This growth is attributed to expanded electric vehicle subsidies, the launch of 16 new models, and increased replacement demand due to a rise in aging vehicles.

Yonhap News Agency

Vehicles scheduled for release next year include the 'GV90' electric vehicle, the 'Seltos' with both electric (EV) and hybrid (HEV) versions, KG Mobility’s new pickup 'Q300', and Renault Korea’s 'Aurora 2', among others.

The number of vehicles over 10 years old increased from 8.98 million in 2023 to 9.93 million as of October this year, further boosting replacement demand. However, if the individual consumption tax cut is discontinued, demand is expected to drop sharply, making it unlikely to achieve sales of 1.69 million units. Due to household debt and the full-scale retirement of the baby boomer generation, domestic demand is forecast to remain below 1.7 million units for the time being.

Exports are expected to reach 2.75 million units, up 1.1% from last year, as trade risks with the United States ease due to the finalized 15% tariff and deferred port entry fees. Other contributing factors include the global preference for hybrids, strengthened environmental regulations in Europe, and the full-scale operation of new domestic EV plants. The expansion of eco-friendly vehicle production capacity, such as Hyundai’s Ulsan EV plant and Kia’s Gwangmyeong and Hwaseong EVO plants, will support export recovery, with export value projected to reach 72 billion dollars (approximately 106.05 trillion won).

Production is forecast to increase by 1.2% compared to this year, driven by the simultaneous recovery of domestic sales and exports, as well as the operation of new factories.

Kang Namhoon, Chairman of the Korea Automobile & Mobility Industry Association, stated, "The full-scale operation of new domestic EV plants and the expansion of eco-friendly vehicle exports next year will serve as a critical turning point for our industry to take a leap forward." He added, "To revive domestic demand, measures such as continued individual consumption tax cuts and support for replacing aging vehicles must be sustained."

He also noted, "Our industry is facing new pressures, including the rapid expansion of Chinese brands, rising protectionism, and amendments to labor union laws," and emphasized, "Production incentive policies, such as a 'domestic production promotion tax system' to alleviate the price and cost burden for domestic vehicles, are urgently needed."