What Awaits Automakers in the Second Half After Withstanding the First Half Thanks to the 'Individual Consumption Tax Effect'?

Domestic Sales of 5 Major Automakers Up 6% YoY in First Half
New Cars Remain Key in Second Half Despite Reduced Excise Tax Cuts

The All-New Santa Fe (Photo by Hyundai Motor Company)

[Asia Economy Reporter Kim Ji-hee] Domestic sales of five major automakers in the first half of this year increased by 6% compared to the previous year. Despite the impact of the novel coronavirus disease (COVID-19), strong sales were driven by the popularity of new cars and the effect of the individual consumption tax reduction.

According to the industry on the 4th, the domestic sales of the five automakers?Hyundai Motor Company, Kia Motors, GM Korea, Renault Samsung Motors, and Ssangyong Motor?last month totaled 176,468 units, a 41.2% increase compared to the same period last year. All five companies recorded double-digit growth rates year-on-year, achieving their highest monthly sales performance this year. As a result, cumulative sales from January to June reached 800,089 units, a 6% increase compared to 755,037 units in the same period last year.

In particular, Hyundai and Kia, which launched numerous new models since the end of last year, performed well thanks to the popularity of these new cars. Last month, Hyundai sold 83,700 units, up 37.2% year-on-year, while Kia sold 60,005 units, a 41.5% increase. Four models, including the Grandeur and K5, joined the 10,000-unit club. Additionally, the concentration of new car purchases ahead of the end of the 70% individual consumption tax reduction benefit in July also played a role.

The problem lies in the second half of the year. With exports not fully recovering due to the COVID-19 pandemic and the government's reduction of the individual consumption tax cut to about half, there are concerns that domestic sales may not maintain the strong performance seen in the first half.

For now, automakers plan to continue aggressive new model launches in the second half to defend sales volumes. Hyundai, which early introduced the facelifted Santa Fe model, will release the fourth-generation Tucson, another volume model. The second SUV, the 'GV70,' is also waiting in line to follow the success of the Genesis brand's first sports utility vehicle (SUV), the 'GV80.' Kia also plans to launch new models of the Sportage and Carnival.

An industry official said, "From this month, the impact of the reduced individual consumption tax cut in the second half is expected to show as demand for vehicle purchases concentrated in May and June. Sales performance for the rest of the year will also vary depending on the success of new models."