In today’s used car market, small is beautiful
The sluggish economy is also stalling, or unbalancing, the used-car market as more people opt for smaller cars.
Sales of city cars shot up last month at SK Encar, the nation’s No. 1 used car seller, while the popularity of full-size sedans has plunged, according to the company.
The used-car market is seen as a more accurate gauge of consumer sentiment due to the high volume of person-to-person deals, whereas numbers in the market for new cars become clouded by the number of corporate deals negotiated at dealerships.
According to SK Encar’s monthly sales report released on Monday last week, the company sold 417 of Kia Motors’ Morning last month, making it the fourth-best-selling car in June for the first time.
The city car, known as the Picanto overseas, is usually ranked eighth to ninth.
However, sales of the Avante HD, a compact from Hyundai Motor, plunged from around fifth to eighth in SK Encar’s June sales rankings after customers bought just 386 vehicles.
Hyundai’s Equus, a luxury full-size sedan also dropped out of the top 10 as smaller cars gobbled up more of the pie.
However, mid-sized vehicles like Hyundai’s Grandeur TG, known as the Azera overseas, and Renault Samsung Motors’ SM5 have retained their popularity. SK Encar sold 550 of the former to mark its second-most successful month to date, and 526 SM5s.
“As the economic slump drags on, people who would have gone for a compact are tending to opt for even cheaper and more economical city cars, while customers who were originally interested in large sedans are also looking at smaller cars,” said Lim Min-young, a communication manager at SK Encar. “It’s clear that customers are ‘downsizing’ their car selections.”
This phenomenon can also be traced to sales of used imported vehicles.
No large luxury sedans were included in SK Encar’s top 10 sales last month. BMW’s 5-Series and 3-Series were the top sellers among the company’s inventory of imports, followed by the Audi A6.
Mid-size vehicles accounted for 33.3 percent of all sales of imported used cars, followed by compact-size cars at 24.4 percent. Large foreign “gas guzzlers” took up just 16.1 percent.
Lim said customers are also becoming more careful in terms of checking the condition of the vehicle when making purchases.
“Whenever new products are stocked in our warehouse, I’ve noticed that more consumers are carefully checking the condition of the car until the very last minute before they sign a deal,” Lim said.
For SK Encar, last month’s top-selling used model overall was Hyundai’s Porter II, a small pickup truck, which indicates the ailing state of the market, according to industry pundits. It sold 608 units of the truck, which is popular among self-employed people, like fruit and vegetable street vendors or deliverers of food supplies.
“The one-ton truck is a unique vehicle that many people want to buy, even during a recession,” said an employee from SK Encar. “As people who are forced to take early retirement or who are having trouble finding a job are trending toward starting their own business, the demand for this pickup is rising.”
SK Encar sold a total of 16,000 Porter IIs last year, making it the fourth best seller behind the Grandeur TG, Avante HD and SM5. To meet anticipated demand, the company said it has raised its inventory of the model in the first half of 2012 by 5,000 units compared to the same period last year.
By Lee Soo-ki, Joo Kyung-don [firstname.lastname@example.org]