Domestic car market to shrivel this year

By Choi Sung-jin

Korea’s automobile market will shrink this year and fail to maintain the expansionary phase of the preceding two years, an industry expert said.

Domestic sales of motor vehicles are expected to fall 3.1 percent to about 1.76 million cars, hit by the expiration of the individual consumption tax cuts, plus the declining popularity of new models, said Park Hong-jae, vice president of Hyundai Motor, at a workshop organized by journalists covering the industry last week.

Korea’s car market grew 8 percent in 2014 and 9.2 percent last year. This year, however, the sales of Korean cars are expected to fall by 80,000 units, as the government will discontinue the excise tax cuts and automakers reduce the manufacture of sport utility vehicles, which enjoyed worldwide popularity last year. On the other hand, the sales of imported vehicles rose to 260,000 cars last year, recording an increase in growth for the seventh consecutive year.

Park, also head of the Korea Automotive Research Institute, said the global auto market will record slower growth, adversely affected by the economic slump in resource-exporting countries and the sluggish recovery in industrial nations. The global markets, which had recorded growth rates of more than 4 percent from 2004-2011, saw their growth rate fall to 1.8 percent last year, and are expected to register a 2.9-percent increase this year, he said.

Park forecast this will mark the first year of steep growth for environment-friendly cars. Last year, the sales of green cars dropped 3.4 percent, hit by low oil prices and the deterioration in popularity of Toyota’s Prius model, the best-known environmental vehicle in the world. However, the debut of various new models will push up their sales to 2.2 million cars worldwide this year, up 17.2 percent from 2015, he predicted.