With a population of approximately 51.5 million, and an estimated GDP in 2018 of $1.65 trillion, South Korea ranks 11th among the world’s largest economic powers and fourth in Asia, and its fleet market has seen growth as of late.
The country has a high-income economy, an emerging financial market, and an economic model focused heavily on exports.
South Korea ranks fifth in the world as an exporter of goods and ninth in imports (ranking 16th in service imports). The main industries in the country based on GDP composition by sector are services (57.6%), industry (39.4%), and agriculture (3%) and include electronics, telecommunications, automobile production, chemicals, shipbuilding, and steel goods. It is the world’s largest producer of semiconductors.
The country’s main trade partners are China (24.8% of total exports), the United States (12%), Vietnam (8.3%), Hong Kong (6.8%), Japan (4.7%), and Australia (3.5%).
South Korea’s Automotive Market Stats
The number of commercial vehicles sold in South Korea rose steadily from 2012 to 2015 (from 234,000 to 262,000), but took a slight dip in 2016 to 256,000. That number rose again in 2017 to 263,000 and was tracked at 60,000 vehicles as of March 2018.
The South Korean business car segment represents about 10% of the total new car sales, which stood at 1,761,404 in 2017, including passenger cars and light commercial vehicles. More recently, new-vehicle sales in the country, including passenger vehicle imports, rose 23.8% year over year to 160,380 units during October 2018, bringing year-to-date total vehicle sales to 1.48 million units, indicating a 1.1% increase, year over year. This increase is attributed, in part, to increased demand for new-vehicle models and a lowered individual consumption tax on passenger vehicles in 2018 (from 5% to 3.5%).
The top four fleet vehicle brands in South Korea are predominantly Korean car manufacturers, with Hyundai and Kia representing 70% of the market share. Renault and GM Korea round out the top four business fleet brands.
Overall, U.S.-made vehicles in South Korea represent a niche market, with most foreign models sold in the country coming from Japan and Germany. Although, other OEMs such as General Motors Korea (GMK), have been growing their fleet presence in South Korea. In 2017, commercial sales represented roughly 9% of GM Korea’s total sales.
Vehicles are subject to various taxations in South Korea, including Individual Consumption Tax, Education Tax, VAT, Acquisition Tax, Transportation-Energy-Environment Tax, and Motor Fuel Tax.
South Korean Current Auto Market Conditions
- The revised trade deal between the U.S. and South Korea, signed in September 2018, had a minimal impact on the automotive market, but did double the number of cars U.S. manufacturers will be able to export to South Korea each year to 50,000. Also, the agreement now only requires those vehicles to comply with U.S. safety standards — rather than complying with South Korean standards — and minimizes South Korean custom restrictions on incoming goods.
- The South Korean government plans to boost electric vehicle (EV) production in the country — with the help of subsidies — to 430,000 battery EVs (from 56,000 today) and 65,000 fuel cell EVs (from less than 1,000 currently) by 2022. Government officials also called for increasing the number of fast-charging stations for EVs to 10,000 by 2022, and the country aims to run all of its trucks and buses with zero emissions by 2030.
- The South Korean government wants to commercialize driverless cars by 2020. In fact, government officials opened up a city-sized test site — called "K-City" — in 2017 for self-driving cars.
- Hyundai and Kia plan to create a production system in their South Korea plants for 23 environmentally friendly cars by 2020, including EVs, hybrid electric vehicles, and plug-in hybrid electric vehicles.
- The South Korean auto parts industry hit a slowdown in 2018 as a result of an economic decline. In response, the country’s government will provide $3 billion in aid for distressed auto suppliers.