Global Car Sales Decline for 2 Consecutive Years... Korean Brands Show 'Strong Performance'

Car Sales in 7 Major Markets Down 4.2% Year-on-Year... Decline Widens

[Asia Economy Reporter Kim Ji-hee] Car sales in major global markets such as the United States, China, and India declined for the second consecutive year. While American and Chinese brands experienced worsening sluggishness, Korean and Japanese brands performed relatively well.

On the 20th, the Korea Automobile Manufacturers Association released the report "2019 Overseas Major Automobile Markets and Policy Trends," analyzing the automobile markets of seven major global countries (United States, EU, China, India, Mexico, Brazil, Russia). According to this report, passenger car sales in these markets decreased by 4.2% compared to the previous year. Not only did the market size shrink for the second consecutive year following 2018, but the rate of decline also expanded from 0.8% to 4.2%.

While advanced markets held up relatively well, emerging markets shrank. First, sales in the Chinese and Indian markets fell by 9.5% and 12.7%, respectively, compared to the previous year. It is analyzed that both countries were directly hit by economic downturns and strengthened environmental regulations. Additionally, major emerging markets such as Mexico and Russia saw their market sizes shrink by 7.5% and 2.3%, respectively.

On the other hand, the EU recorded a 1.2% increase in sales compared to the previous year. This marks the sixth consecutive year of expansion in the EU passenger car market. In the United States, sales decreased by 1.4% compared to the previous year but still maintained a scale close to 17 million units.

By brand, European, Japanese, and Korean brands performed relatively well, whereas American and Chinese brands struggled. European brands saw a 0.6% increase in sales compared to the previous year, driven by increased sales within the EU market and strong performance of German brands in the Chinese market. Their overall market share jumped from 31% in 2018 to 32.6% last year. Japanese brand sales decreased by 3.2% compared to the previous year, but their overall market share slightly increased to 25.6%. This was attributed to increased sales centered on hybrids in China.

Korean brands increased sales by 4.6%, 2.8%, and 1.0% in the United States, EU, and India, respectively, through market-specific tailored model introductions. However, sales in the Chinese market dropped by 14.4%, resulting in an overall 1.9% decrease. Market share rose from 7.4% in 2018 to 7.6% in 2019.

Chinese brands saw a significant drop in sales due to sluggish domestic market performance. Their market share last year was 13.3%, down 1.8 percentage points from 2018.

Furthermore, the report emphasized that major countries are actively considering support measures to foster the future car industry, such as promoting electric vehicles and supporting autonomous vehicle development, while also preparing for employment reductions related to internal combustion engine vehicles. The EU plans to distribute 13 million zero- and low-emission vehicles by 2025 as part of its goal to achieve carbon neutrality by 2050. In particular, Germany aims to expand electric vehicle distribution to 10 million units and charging infrastructure to 1 million by 2030. Based on the "Germany Future Mobility Platform" forecast that up to 400,000 jobs related to internal combustion engine vehicles could disappear in Germany alone, subsidies for retraining workers for job transitions are being considered.

Jung Man-ki, Chairman of the Korea Automobile Manufacturers Association, stated, "Although Korean brands performed relatively well in the global market last year, considering the rapid changes in the automobile market environment and China's pursuit, policy support to enhance corporate competitiveness is urgently needed." He added, "In the short term, due to the COVID-19 outbreak, production disruptions exceeding 40% compared to existing plans have occurred, so sufficient special extended work allowances and active cooperation from labor unions are necessary to compensate for this."

He continued, "In the mid to long term, to reinforce the weakening foundation of the domestic automobile parts industry caused by overseas industrial relocation, the advancement of parts production systems, wage stability within productivity scope, and enhancement of labor flexibility must be promptly pursued."