Benefiting from 'Carflation'... Auto Stocks Soar

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[Asia Economy Reporter Kwon Jae-hee] As global supply chain issues and the Ukraine crisis have made it difficult to procure auto parts, 'carplaytion (car+inflation)' has intensified, benefiting automobile stocks. In particular, rental car companies' stock prices have recorded an increase of about 30% over two months.

According to the Korea Exchange on the 15th, Kia Motors closed at 76,800 KRW the previous day. This is a 12.8% increase compared to the lowest point of 68,100 KRW (closing price) on March 15. During the same period, Hyundai Motor also closed at 177,500 KRW on the 14th, one month after reaching its peak of 162,000 KRW on March 15. Not only finished car manufacturers but also rental car companies' stock prices rose. SK Rent-a-Car closed at 11,400 KRW on April 14 after hitting a low of 8,770 KRW on January 28, marking a 29.9% increase. K Car also closed at 31,650 KRW on April 14 after hitting a low of 26,000 KRW on January 27.

The background for the stock price increase of major finished car and rental car companies is attributed to 'carplaytion.' Due to supply chain issues, used car prices have reached levels comparable to new car prices, and as finished car manufacturers face difficulties in procuring parts, they are producing mainly high-priced and large vehicles rather than small and low-priced cars.

The Korea Automotive Technology Institute stated, "As carplaytion, the rise in car prices due to the Ukraine crisis, prolongs, the number of affordable cars is decreasing due to strategic changes by finished car manufacturers."

Given this situation, consumers have no choice but to either purchase high-priced cars as new cars or use rental cars.

Park Jong-ryeol, a researcher at Hyundai Motor Securities, said, "The operating environment for rental car companies has been positive due to increased domestic travel and mobility demand, and the solid growth trend in rental and used car sectors has continued."

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