Young Koreans reluctant to buy new cars amid income decline

[Photo by Lee Chung-woo]

South Korean consumers in their 20s are reluctant to buy new cars amid a decline in overall spending by the age group and demographic changes such as low birth rates and aging population.

According to data from the Korea Automobile & Mobility Association and Ministry of Land, Infrastructure and Transport on Monday, 1,376,621 vehicles were newly registered in the first 11 months of this year. About 6 percent, or 82,358 vehicles, were registered by owners in their 20s, the lowest figure since 2009.

The decline has been led by falling disposable income and rising household debt.

Recent data from Statistics Korea showed that the income of households headed by individuals aged under 30 fell 7.4 percent to 31.14 million won in 2021 from 33.63 million won in 2018.

The income of households headed by other age groups, on the other hand, increased – 11.5 percent in households headed by those in their 30s, 10.8 percent in 40s, 10.6 percent in 50s, and 22.5 percent in over 60.

Koreans aged under 30 also saw a significant surge in debt, with an increase of 93.5 percent from 25.91 million won in 2018 to 50.14 million won in 2022, the highest growth rate of all age groups.

The price of new cars has also increased, making it more difficult for young people to afford a car.

The price of Hyundai Motor Co.’s compact sedan Avante, for example, rose by 40.7 percent over the past five years.