Korea's young people aren't buying cars anymore

Finished cars line up at the Hyundai Motor's Asan, South Chungcheong factory in 2021. [NEWS1]

Younger adults are purchasing fewer cars in Korea, while older adults are purchasing more, according to new data compiled by the Korea Automobile & Mobility Association.

People in their 60s accounted for 11.4 percent of new car owners in 2023, a significant increase from their share of 8.8 percent in 2019.

A total of 169,655 people over 60 registered a car that year, an uptick from the 131,176 who did so in 2019.

It was the first year that the age group surpassed a 10 percent share.

The proportion of new car owners in their 20s and 30s, in turn, shrank. Buyers in their 20s fell from 7.1 percent in 2019 to 6.7 percent in 2021 and 5.8 percent in 2023.

Those in their 30s showed a similar steady decrease — falling from 15.9 percent in 2019 and 14.9 percent in 2021 to 14.1 percent in 2023 — despite being perceived as having more stable income.

Some data suggest that young adults are refraining from purchasing cars due to their finances.

The average adult younger than 39 held assets of 363 million won ($271,808) in 2022 according to Statistics Korea, while those over 40 claimed an average of 584 million won. The gap between the two groups is widening every year.

Some experts suggest that the recent surge in car prices may be attributed to the increased prices of automobile components.

“The average age of cars owned by consumers is increasing due to the decrease in population and the rise in car prices going through Covid-19,” said Kim Pil-soo, a professor of automotive engineering at Daelim University College.

The aging population also presents challenges for automobile-related companies, as sales may decline as population decreases.

Driving schools are closing, for example, as there are fewer people attempting to get a driver's license.

There were just 960,000 newly licensed drivers in 2022 according to the National Police Agency, compared to 1.08 million in 2017.

“The millennial generation, those born from 1980 to 2000, tends to share cars rather than to buy one themselves,” Hyundai Motor Group Executive Chair Euisun Chung said during a meeting in 2019. “My son doesn’t even think of getting a driver’s license.”

Car production companies are rushing to advertise cars to young consumers, leveraging both price and design, from the initial stages of product development.

The outer interior of the Genesis GV80 Coupe, released from Hyundai Motor’s brand Genesis last year, was redesigned to appeal to consumers in their 30s and 40s.

“The planning process for the coupe model aimed to attract younger buyers from the outset,” a brand insider said. “The average age of the actual buyers of the model is five to seven years younger compared to the original products previously released from the brand.”

This may also explain why car production companies are continuously launching crossover utility vehicles (CUVs), which are popular among young consumers. A CUV sits between a sedan and an SUV, offering the wide interior and view of the latter at a lighter weight.

Kia’s EV3, set to launch this year, is another product designed to attract younger adults with a comparatively affordable price tag.

The Hyundai Motor Group’s heavy investments in its high-performance N brand also catered to the demographic.

“One of N brand’s goals is to offer an exciting driving experience to those who are not interested in driving,” a source from Hyundai Motor’s N brand department said.

Hyundai Motor and Kia have also operated subscription platforms called “Hyundai Selection” and “KIA Flex,” respectively, since 2019, targeting the young adults in their 20s and 30s.

BY KANG KI-HEON [kim.jiye@joongang.co.kr]