Used car prices surge as new car deliveries are delayed

Rising prices and a shortage of new cars has caused a sharp increase in demand for used cars. "Used car prices are surging," said a used car business owner in western Seoul.

Cars are parked at the Janganpyeong used car market in Seongdong District, eastern Seoul. [NEWS1]

Rising prices and a shortage of new cars has caused a sharp increase in demand for used cars.

"Used car prices are surging," said a used car business owner in western Seoul.

"Before, the price of medium-sized cars dropped by 5 to 7 million won ($5,520) a year after the car was sold. But the price of used cars sold one to three years ago is almost the same as the price of newly released cars."

"Even used cars that have been driven about 15,000 kilometers (9,320 miles) are sold at the price equivalent to that of a new car if they are popular car models such as Kia Sorentos and Sportages."

Hyundai Motor's 2020 Tucsons sold for an average of 30.62 million won in April, which is only a 930,000-won difference from the price of the new car, according to Encar, a car-trading site.

Purchasing a new car this year has been more time-consuming for buyers since the lead time for a new car is up to one and half years.

"There are even customers who purchase secondhand cars at a higher price than new cars if the options and accumulated kilometers are O.K., since they would have to wait for six months or even longer than a year for a new car to be delivered," said a used car dealer.

In particular, 1-ton trucks, such as the Porter II and Bongo III, are in high demand by the self-employed.

"The price of the Bongo III truck is about 19.9 million won, and a 2018 model of the truck was sold at 21 million won recently. Small trucks are essential for the self-employed, so these people are buying them at a higher price," said the dealer.

Currently, it takes more than ten months for Kia's Bongo III to be delivered to the purchaser.

For other models, such as Kia's Sorento and Sportage Hybrid, the waiting time is over 18 months.

"Electric vehicles and hybrids require a greater number of auto chips compared to internal combustion engine vehicles," said a spokesperson for Kia. "This is why the lead time is long for these models."

The imported car market is experiencing a similar situation.

"The release of new domestic cars has been delayed in Europe due to the Russia-Ukraine war," said a spokesperson from an overseas automaker.

For imported cars this year, used car prices are up 1 to 2 million won from last year.

The high price of used cars, along with surging fuel costs, are a struggle for car owners.

"The recent hike in the price of diesel has also been tough on the self-employed," said Lee Ho-geun, an automotive engineering professor at Daeduk University.

"The government should consider waiving the vehicle registration tax and also letting automakers prioritize production of car models that are primarily used by people who use these vehicles to earn a living."

BY BAEK MIN-JEONG [cho.jungwoo1@joongang.co.kr]