Gas Prices Give Small Cars Wider Lane
By Kim Hyun-cheol
Staff Reporter
The economic downturn and high oil prices are changing consumer preferences for cars. Compact and small vehicle models, once shunned over safety and prestige, are now coming back with a vengeance.
It all comes down to simple arithmetic: small cars log more miles on the same amount of fuel. For this, sales figures speak volumes.
The compact Hyundai Click posted sales of 4,615 units last month, up 28 percent from the same period last year. Another small-sized model, the Verna, also showed sales growth of 10 percent. The two models saw sales more than double last month year-on-year and reach 80 percent of their sales for all of last year.
GM Daewoo is enjoying success with its compact Gentra model, as sales have soared virtually fivefold to 5,748 this year. The automaker said it is struggling to meet domestic demand, with exports exceeding 132,000 vehicles in the first half of the year.
``Mini'' cars, which had seemed to hit bottom over the last couple of years, are showing a consistent upturn in sales. Sales of the Kia Morning have reached 52,629 vehicles this year, up 260 percent from last year, while the New Matiz of GM Daewoo also saw sales rise 13 percent.
As of last month, registered vehicles with engines under one liter numbered nearly 1.7 million, up 10.4 percent from a year earlier, the Ministry of Land, Traffic and Maritime Affairs said Sunday.
The traditional consumer preference for bigger sedans is changing amid a struggling economy, with prices and fuel efficiency emerging as the main criteria, industry experts said. Purchasing compact cars, for example, saves consumers more than four million won ($3,869) over small sedans.
The latest models benefit from better interior options and additional services. The 2009 models of Hyundai's Click and Verna are equipped with safety and convenience features almost the same as those of sedans. Buyers are also get price guarantees if they later sell the vehicles.
Hyundai said demand for small sedans are shifting to compact models as sales of the former are falling around 30 percent.
"Delivery of the Click and Verna models are backlogged due to surging orders," a Hyundai source said.
Additionally, smaller vehicles have more than double the fuel efficiency of sedans.
Four compact models can drive an average of 16.1 kilometers per liter of gas, higher than 8.3 kilometers of five grand-sized sedans, according to data from the Korea Energy Management Corp. The figure was 18.3 kilometers for six mini vehicles.
Based on a driver covering 16,000 kilometers a year and the average gasoline price in the last week of July, smaller vehicles can save more than 1.6 million won compared to sedans.
Some makers are expanding production capacity for smaller vehicles, showing this is not just a temporary trend.
Kia has built an additional line for in its plant in Seosan, South Chungcheong Province, raising production of its compact New Morning from 150,000 a year to 180,000.
The carmaker is planning to further stretch the capacity to 250,000 by early next year.
Surging demand for the model triggered the expansion, Kia said. A person who buys the New Morning now must wait at least five months to get the vehicle delivered. Exports of the model have been partly delayed due to lower shipments to meet domestic demand.
Sales of New Morning reached 52,629 units last month, double that for all of last year.