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Domestic Car Sales Will Shrink, Imported Cars Will Flourish: Research
Reflecting global economic woes, the Korean car market is expected to shrink this year, but with robust sales in the sport utility vehicle sector, a local think tank has suggested.
“This year, a total of 1.76 million units of cars are expected to be sold in Korea, which is about 3.1 percent down from 1.82 million in 2015,” said Park Hong-jae, chief of the Korea Automotive Research Institute.
The institute under Hyundai Motor Group attributed a lack of new models to come ― mainly in the SUV sector ― as well as the cessation of individual consumption tax deductions to the glim outlook.
“We are seeing a renaissance of SUVs in the market surrounding compact models. People have been replacing their sedans with SUVs earlier than the usual consumption cycle. But this year, we think many of those customers will have fulfilled their needs. And domestic carmakers have few options in the market, which means that there are fewer choices for potential consumers,” Park said.
“With the temporary individual consumption tax deduction having concluded as of Dec. 31, and the stale forecast in the real estate market looming, the market will shrink a little,” he added.
He cited the importance of SUVs in sustaining car sales.
In stark contrast, the sales of imported cars will go strong, with 261,000 units to be sold, up 7.5 percent from the previous year.
“The imported car market showed double-digit growth in the past couple of years. And compared to that we may see a slowdown, but still a strong presence,” Park said.
In fact, some of the global industry powerhouses, including German cars attempting to recover customers’ trust and market share, are increasing their promotional activities.
According to industrial reports, more than 50 fully changed or face-lifted models of foreign brand cars are expected to be introduced this year. They range from BMW’s new M2 Coupe and the X4 M40i SUV, to the Audi A3 Sportback 3-tron, the new A4, as well as Mercedes-Benz’ face-lifted A-class series and the fully revamped M-class and GLK SUVs.
“Car importers have had a rough 2015, from Volkswagen’s emissions test-rigging scandal to the mangling of a Mercedes sedan and the mass recall order for BMW cars. However, the numbers show that they still managed to sell 235,000 units last year and will sell a huge number this year. The preference for imported SUVs has also been a boon for the industry,” Park said.
The institute also forecast global car sales for the year to reach 88.5 million units, up 2.9 percent from 2015.