Think tank: Auto sales will decline this year
For the first half of this year, automakers posted a 9 percent year-on-year growth rate in Korea, selling 934,000 units, largely as a result of the release of new vehicle models and an extended period for individual consumption tax cuts.
The latter half of the year will have neither benefit as the period for tax cuts ended last month and no significant new car releases are scheduled this year.
According to a report issued by Korea Automotive Research Institute (KARI) Thursday, automakers are expected to sell only 890,000 units in the second half, an 8.7 percent fall over the previous year and a decline of more than a 4 percent decline compared to the first half of the year.
As a rescue plan, the Korean government rolled out a tax break to those who scrapped old diesel cars, but it had a minimal effect.
This year’s car sales are expected to reach 1.8 million units, a 0.5 percent year-on-year decrease, a loss for the first time in three years since 2013, when sales declined 0.2 percent.
Auto sales in Korea mirror the global automotive market.
After posting a 2.5 percent year-on growth in the first half of this year by selling 43.7 million units worldwide, automakers will sell only 44.5 million units, according to the report, a 2.2 percent yearly growth and a 0.3 percentage-point decline compared to the first half of this year.
Researchers at KARI blamed Brexit for the slow growth, saying the unstable economic market, especially in European nations, is hindering consumers’ large-sum purchases.
Car sales in European nations posted a 9 percent yearly growth in the first half of this year, which acted as a vital force behind the global growth rate. However, because of the Brexit, weakened consumer sentiments will send the number down to 0.7 percent in the remaining months of this year.
The U.S. car market also was expected to grow only by 1.2 percent, while the first half grew by 1.5 percent compared to the same period last year. The annual growth would record a 1.3 percent growth which would be a record-low in seven years after the country was hit by the worst financial crisis in 2008.
“Although the number of car exports in Korea decreased in the past, Korea’s car market was able to withstand it because domestic market was always growing,” said one industry insider.
“However, the latter half of this year will be unstable in many ways because of a simultaneous decline in domestic and overseas market.”
BY JIN EUN-SOO [firstname.lastname@example.org]