Imported car sales in Korea more than double in the past decade

Audi AG’s the A6 45 TFSI [Photo by Lee Chung-woo]

Imported car sales in Korea more than doubled over the past decade as consumers are earning more income and their growing preference for larger and luxurious cars.

According to an analysis of imported car sales in Korea by the Maeil Business Newspaper released on Monday, imported car makers sold a combined 298,006 units, worth 25.26 trillion won ($18.9 billion), in the domestic market last year. Compared to a decade ago, the number of units sold rose 128 percent and the total sales value 224 percent.

The analysis drew upon new car registration data and new car price data by model available from the Korea Automobile Importers and Distributors Association and the automobile statistics platform CarIsYou. As for car prices, the lowest price for each model in each year of production was used, and additional options or trim specifications were not reflected in the prices.

The size of the domestic imported car market, based on total sales value, has grown to an extent comparable to sales at some of the largest companies in Korea, according to the analysis. Companies with sales last year comparable in size to the total imported car market are KT Corp. at 25.65 trillion won, LG Energy Solution Ltd. at 25.60 trillion won, Industrial Bank of Korea at 25.59 trillion won and Korea Investment Holdings Co. at 25.28 trillion won.

In terms of the number of cars sold in the market, eight out of 10 passenger vehicles are still made by Korean carmakers, but growing sales of imported cars are slowly chipping away the dominance of locally-made cars. The number of passenger vehicles sold domestically by local carmakers was 1.16 million units in 2022, down 2 percent from the 1.18 million units a decade ago.

On the other hand, the share of imported cars in the domestic car market, based on the number of units sold, rose to 21 percent in 2022, from 10 percent in 2012. The share of imported cars based on sales value rose even higher to 40 percent from 25 percent 10 years ago.

“While a variety of imported car models are now available in the local market here, from premium models to popular models, foreign car dealerships are attracting younger drivers with lowered thresholds to ownership by offering discounts and financial perks,” said Kim Pil-su, a professor of automotive engineering at Daelim University College.

Behind the rapid growth of imported cars is more sales of higher-priced models. The ratio of sales by vehicle price range shows the change. The proportion of imported cars selling for 100 million won or more per unit was 24 percent in 2022, compared with 8 percent seen in 2012. Over the same period, the number of vehicles sold that cost more than 200 million won surged 22-fold, to 9,743 units, from 439 units.

Another cause is rising prices of cars made by local carmakers. The average price of a passenger vehicle made by Hyundai Motor Co., increased by 49 percent to 50.31 million won last year, from the average 33.87 million won price in 2012. The average price of an SUV or crossover made by Hyundai’s affiliate Kia Corp. also rose by 48 percent to 43.55 million won, from the 29.46 million won seen a decade ago.

Higher vehicle prices are attributed to strong consumer preference for higher-end vehicles, amid the trend of broader or more general adoption of higher trims and more options. Given that 154,778 imported vehicles, or 51.9 percent of the total 298,006 units sold in Korea last year were priced below 70 million won, the gap between the prices of domestic and imported vehicles is narrowing.

Imported brands are also lowering barriers in consumers’ minds, with offers of aggressive discounts and low interest payments. At the end of last year, the local dealership of German carmaker Audi AG cut the price of its latest 2023 release of the A6 45 TFSI model by 25 percent to 52.83 million won from 70.44 million won, on the condition of a lump sum.