Used car prices fall, deliveries get speedier

Inflation, low consumer confidence and high interest rates are clouding prospects for Korea's auto industry, leading to a decrease in used-car prices but faster car deliveries.

Vehicles are parked at the Janganpyeong used-car market in Seoul on Thursday as used-car prices continue to fall. [YONHAP]

Inflation, low consumer confidence and high interest rates are clouding prospects for Korea's auto industry, leading to a decrease in used-car prices but faster car deliveries.

Used-car prices skyrocketed last year due to the semiconductor shortage, but are now cooling off. Many intended buyers are canceling orders as higher interest rates jack up their monthly payments.

Research released by EnCar.com, a Korean used-car marketplace, on Thursday showed that the car resale values in January fell 1.52 percent compared to December 2022. The research analyzed price changes of 39 major domestic and imported car models from automakers including Hyundai Motor, Kia, Ssangyong, Mercedes-Benz, BMW and Audi.

“Historically, prices of used-cars tend to rebound in the first month of the new year as demand for used-cars piles up, but this year looks different,” a spokesperson from Encar.com explained.

December is usually a slow month for used-car sales. Supplies increase as many people put their cars up on sale before the year ends, while demand goes down as carmakers competitively offer year-end discounts for the new cars. In January, prices would climb.

But not this year. Data from EnCar.com showed the average prices of used domestic cars dropped 1.33 percent in January from the previous month. Only two out of 21 models analyzed saw a rise. The drop was larger for sports utility vehicles (SUVs) than sedans, which the auto industry believes is because consumers fear high fuel costs amid growing fears of a recession.

Prices of second-hand cars dropped by 3.18 percent for Hyundai’s Tucson (NX4) 1.6 Turbo 2WD Inspiration, 2.21 percent for Hyundai’s the New Santa Fe 2.2 2WD Prestige, 2.81 percent for Kia’s the New Carnival Prestige (9-seater Prestige), and 2.57 percent for Kia’s Sorento 4th Gen 2.2 Diesel 2WD Signature.

Imported cars saw a bigger drop in their resale prices than domestic cars, with prices dropping 1.73 percent on average in January compared to the previous month. The resale price for the BMW 3 Series (G20) 320i M Sport, in particular, plunged 3.46 percent compared to the previous month. Electric car Tesla Model 3 Long Range saw its resale price fall 2.81 percent from the previous month.

Meanwhile, new car delivery times are getting shorter in 2023, compared to a year ago when people had to wait more than a year to receive their new car.

According to Hyundai Motor Group’s vehicle delivery date information for January, which was distributed to car dealers last month, new car delivery times for major Hyundai models were shortened by two to five months compared to December last year.

People ordering a Hyundai Motor's Grandeur (2.5-liter gasoline model) have to wait 10 months for their vehicles to be delivered, compared to 11 months for orders made last month. Kia's Sorento, which topped domestic sales last year, will be delivered in five months. Last December, customers had to wait 10 months.

“There have been more buyers canceling new car orders because of the hike in interest rates,” a Hyundai Motor Group dealer said.

Ssangyong’s Korandos will be deliver after about a month. The Trailblazer, a subcompact SUV by GM Korea, can also be received within a month.

The situation is similar with imports. Some of BMW's 5-Series models are reportedly available for immediate delivery. Some Audi and Hondas can also be delivered without a wait. This is due to growing anxiety over the economic situation and the price of used-cars rising so much last year.

BY LEE SOO-KI, KANG KI-HEON, SEO JI-EUN [seo.jieun1@joongang.co.kr]