A quarter of Korea’s car repair shops close as EV boom takes toll

Industry

Published: 30 Jan. 2024, 07:00

A quarter of Korea’s car repair shops close as EV boom takes toll

A car is repaired at an auto repair shop in Samjeon-dong, Songpa District. Park Seong-sam, the owner and sole-mechanic of the store, plans to shut down his business. [CHEON KWON-PIL]

Traditional auto repair shops are rapidly shutting down as the expansion of the EV market has reduced the demand for their service.

The transition toward eco-friendly cars, including EVs, amid a quickly changing automobile market is directly influencing the livelihoods of the auto maintenance business, which revolves around combustion engine cars.

Over 13 years, the number of automobile maintenance shops, referred to as “car centers” in Korea, decreased by almost 1,000 stores, or 24.9 percent, from 3,711 in September 2010 to 2,786 in September last year, according to the Ministry of Land, Infrastructure and Transport.

Traditional auto repair shops in Seoul are shutting down as the expansion of the EV market reduces the demand for their service. [YOON YOUNG]

Auto repair shops in Seoul, paying high rent fees, were the first to be hit. Yongsan District had the biggest number of closures over the last five years, based on the number of shops registered at the Korea Automotive Maintenance Association (Carpos). The 63 shops in 2018 dropped down to 23 last year. Following Yongsan is Seocho, Jung, Gangdong and Songap District, with 26, 23, 21 and 19 shops closing down in each area, respectively.

Park Seong-sam, who runs an auto repair store in Samjeon-dong, Songpa District, also decided to close shop due to rising rent and subdued demand.

“I can’t go on since rent continues to rise while demand for repairs falls,” Park said. “Shops for auto body work, such as for car tinting, are increasing in place of repair shops. Metaphorically speaking, it’s like local hospitals disappearing while dermatology and plastic surgery clinics increase in number.”

Park Seong-sam, owner of an auto repair shop in Songpa District, southern Seoul, examines his tools. [CHEON KWON-PIL]

Fifty four-year old mechanic Park is preparing to close shop. It is a store he set up after 10 years of working as a mechanic in the neighborhood, from the age of 24. The reason he’s shutting down the business, which Park claims “did so well he couldn’t even close his wallet just 20 years ago,” is that the number of customers coming by has dropped drastically.

The moment of crisis came five years ago. As customers dwindled, auto repair shops in the area started to close down. “There were 16 auto repair shops in Samjeon-dong five years ago but six closed down and now only 10 remain. Even those are mostly run by the owners alone without employees,” Park said. Though he received training on EVs to accommodate its growing demand for maintenance, for Park, a mechanic with 30 years of experience in engines, the engine-less EVs were much too similar to electric products and so he gave up.

“The situation’s only going to get worse in five to 10 years’ time so I need to find a way to make a living. I’m thinking of giving up auto maintenance to take out a loan and set up a car inspection station in the countryside,” he added.

An EV charging station at a supermarket in Seoul [YONHAP]

Experts largely attribute the auto repair shop market’s rapid shrinkage to the automobile market’s transition to carbon neutrality. The proportion of EVs in the market for new cars has been increasing thanks to the government’s green subsidy policy, and commercial vehicles that see a lot of time on the road, including small trucks, are increasingly going electric for the large subsidy benefits.

Demand for auto maintenance has especially decreased as more old cars are scrapped early. Starting last year, the Ministry of Environment extended its support that gives out 8 million won ($5,990) in subsidies for scrapped cars to include not only Grade 5 but also Grade 4 diesel cars. Diesel vehicles are graded in Korea based on a five-tier emission standard, in which Grade 5 vehicles emit the highest amount of emissions.

Over the last year, the number of Grade 4 and Grade 5 diesel cars on Korean roads dropped by 150,000 and 110,000 vehicles, respectively. The cumulative number of registered fossil fuel cars also turned to decline for the first time ever. As of the end of the last year, fossil fuel cars, powered by either gasoline, diesel or liquefied petroleum gas (LPG), decreased by 85,000 vehicles whereas eco-friendly cars including EVs, hydrogen vehicles and hybrids increased by 530,000, according to the Transport Ministry.

As old cars now leave for the junkyard without getting fixed and engine-less EVs flood the new car market, the future for auto repair businesses has become even more bleak.

“Even though EVs stop by, [the owners] only ask to put air in their tires, and we can’t make a living off of that,” Hwang Kyung-yeon, owner of a repair shop in Mullae-dong, Yeongdeungpo District, said.

According to Carpos’s survey, 74 percent of auto repair stores in Korea are one-man shops. “There are a lot of car center owners who earn less than minimum wage while working alone without employees,” Carpos chairman Kang Soon-geun said. “I used to put the air in [customers’] tires for free before, but now receive 5,000 to 10,000 won for the service due to my small income.”

The faster the transition to cars powered by other energy sources accelerates, the larger the possibility becomes that the auto maintenance industry’s crisis expands nationwide.

The Korea Automotive Technology Institute (KATECH) published a report last year on the impact the industry’s transition to new cars will have on employment. “In the case of transition to EVs, the demand for auto repairs, which is centered around [fixing] internal combustion engine components, will drop to 30 percent of the current level, effectively influencing the existence of and employment in the auto maintenance industry,” the report read. “As businesses that are not considering a transition make up 70.3 percent of the total, a countermeasure to prepare for the change is in urgent need,” it added.

Members of the Korea Automobile Repair & Inspection Federation gathered in front of the National Assembly on Dec. 28 to demand a just transition in automobile industries. The sign in the far right of the picture reads “Unreliable EVs. We cannot repair them!” [CHEON KWON-PIL]

Auto maintenance business heads recently gathered in front of the National Assembly, saying that “the auto maintenance industry has been excluded from the just transition and have been reduced to becoming underprivileged.”

“The government and the National Assembly must provide supportive measures,” they demanded.

Meanwhile, concerns have been voiced about a potential mismatch in maintenance supply and demand, resulting in negative consequences for both EV and gasoline car drivers. High demand, but not enough supply, for EV maintenance services has led to delays in repairs for EV owners.

“Even now, there are not enough auto repair businesses that can fix EVs, to the extent that EV owners have to wait until the summer to fix their heaters,” Citizens for Future Cars Association chairman Lim Ki-sang said. “Support, such as in the form of significantly expanding the pilot project that aims to convert a select few auto repair shops into repair shops for future cars, is needed for a just transition,” said Lim.

BY CHEON KWON-PIL [kim.juyeon2@joongang.co.kr]