Waiting time for new car deliveries cut in half in Korea
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According to sources on Monday, the waiting period, which used to take several months depending on the model, has been rapidly reduced this year. For example, delivery of Hyundai Motor Co.’s Grandeur, based on the 2.5-liter gasoline model, took as long as 11 months in December last year but has now been reduced to around five months.
The waiting period for Hyundai’s popular electric vehicle Ioniq 5 model has been reduced to 6 months this month from 12 months at the end of last year. The waiting period for the Kia Corp.’s K5, based on the 1.6-liter gasoline model, has also been cut to four months from nine months over the same period.
High interest rates are also causing many consumers to forgo purchasing new cars that are already under contract. The new car installment rate, which was at 2 percent-3 percent level for a 36-month contract early last year has now jumped to around 8 percent. Car installment rates are determined by fixed interest rates at the time of delivery, not the time of contract. Therefore, consumers who contracted to purchase a new car last year and received it this year will have a three to four times higher interest burden, leading to an increase in the actual purchase price. There has also been an increase in cancellations of purchase contracts from corporate consumers, such as rental car companies.
Furthermore, the reduction in production delays thanks to growing auto chip supply is also a reason for the decline in the waiting period for new car deliveries.
Still, the waiting period for very popular brands, such as hybrid models, remains around one year. The delivery waiting period for the Santa Fe Hybrid has been reduced by six months to 14 months this month from over 20 months in December. The Sorento Hybrid has only been reduced by two months, to 16 months from 18 months over the same period.
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