Imported car sales dip as inflation rises

Sales of imported passenger cars retreated last year as high inflation and interest rates weakened consumer sentiment.

The BMW 520d, left, and Mercedes-Benz E300 [BMW, MERCEDES-BENZ]

Sales of imported passenger cars retreated last year as high inflation and interest rates weakened consumer sentiment.

The number of newly registered imported cars totaled 271,034 last year, down 4.4 percent from a year earlier, according to data from the Korea Automobile Importers & Distributors Association (Kaida). Sale of imported cars have generally been on the rise since 2019, when the number stood at 240,000. The figure jumped to 280,000 in 2022.

Sales from BMW, the No. 1 imported car brand in Korea, were down 1.46 percent last year from a year earlier, while those of Mercedes-Benz, the second largest, was down by 5.28 percent. Sales from Audi, the third largest, plunged by 16.5 percent over the same period.

“The number of new imported passenger car registrations in 2023 decreased from the previous year, because some brands lacked supplies or tried to sell out the existing stock before the upcoming release of new models,” said Jung Yoon-young, vice chairman of Kaida.

“The proportion of people who buy imported cars via installments and lease is higher than that of domestic vehicles, so a lot of customers felt pressure to buy a new car amid high interest rates that continued last year,” said a source from the imported car industry. “I expect the withered consumer sentiment to continue [affecting imported car sales] this year.”

Domestic cars, led by Hyundai Motor, expanded their market share last year.

The share for Hyundai Motor and Kia automobiles in Korea expanded to 76 percent last year, up from 73 percent in the previous year, boosted by hybrid and electric options.

Despite withered domestic spending, sales from Volvo Cars and Toyota also jumped.

Volvo Cars sales hit a record of 17,018 last year, the highest number recorded since the company set up its corporate body in Korea in 1998. Those were helped by the launch of the V60, a mix of a traditional station wagon and off-road machine, which is not common in Korea. Volvo also plans to release an electric EX30 this year.

Toyota launched its fifth-generation Prius late last year.

The sales ranking of Volkswagen, which once was the fourth largest imported car brand in Korea, slid to the seventh last year with 10,247 units sold, an on-year decrease of 35.1 percent. The brand is widely viewed as having failed to keep pace with the swift conversion to environmentally friendly cars.

“The dynamics of the imported car market are changing as sales of eco-friendly cars grow,” said Kim Pil-soo, an automotive technology professor at Daelim University College. “Growth of the hybrid car market will be an important element in the sales of imported cars.”

BY KANG KI-HEON, JIN MIN-JI [jin.minji@joongang.co.kr]