Sales Volume of 47,371 Units in the First Half of the Year... 15.7% Decrease Compared to Last Year
Domestic Market's New Cars Also 'Below Expectations'... Exports Halved Due to COVID-19
[Asia Economy Reporter Kim Ji-hee] The domestic compact car market, which has been on a downward slope, is struggling to find a chance for a rebound. Despite the overall strong performance of domestic car sales amid the COVID-19 crisis, compact car sales in the first half of this year did not even reach 50,000 units. At this rate, the annual sales could fall below 100,000 units for the first time in 12 years since the compact car standard was expanded to engines under 1000cc in 2008.
According to the industry on the 7th, domestic sales of compact cars (Morning, Ray, Spark) this year recorded 47,371 units. This is a 15.7% decrease compared to the same period last year. Sales of all three models declined compared to the same period last year. Considering that domestic sales of the five major automakers increased by about 6% during this period, the sluggishness of compact cars stands out particularly.
The domestic compact car market grew to exceed annual sales of 100,000 units starting in 2008. In 2012, it enjoyed its heyday with 216,752 units sold. However, as the preference for larger cars spread and demand shifted to small sport utility vehicles (SUVs), sales declined. With more options available in higher vehicle classes, compact car sales have recently plummeted by about 10% annually, dropping to 113,708 units last year. If this continues, it is highly likely that sales will fall below 100,000 units this year.
Especially since a new model of the representative domestic compact car Morning was released in the first half of this year, such results are even more painful. Kia Motors launched the facelifted model of the third-generation Morning, released in 2017, called the 'Morning Urban' in May. Notably, it was equipped with advanced driver assistance systems such as Lane Following Assist (LFA), which are rarely found in existing compact cars, making it a key player expected to lead the rebound of the stagnant compact car market.
As of the third month since its launch, the new Morning's effect has been below expectations. In May, the first month of release, 3,452 units were sold, and in June, 3,260 units. This is less than last year's monthly average of over 4,000 units. Even after the Morning Urban launch, monthly sales have not exceeded the low 3,000s, resulting in only 20,211 units sold in the first half of this year.
Adding to the domestic market slump, exports, which had previously compensated for domestic sluggishness, have shrunk due to the COVID-19 pandemic this year, making the situation even worse. From January to May this year, Morning exports totaled 36,744 units, about half of the same period last year. With export routes blocked and domestic sales continuing to decline, Donghee Auto, which produces Kia's compact car lineup Morning and Ray under contract, will halt operations for two weeks from the 13th to the 24th of this month.
An industry insider said, "Traditionally, compact car sales increased during economic downturns, but now that formula no longer seems to apply," adding, "While the small SUV segment, classified just above compact cars, has seen an increasing number of options every year, automakers have been reluctant to launch new compact car models, which also contributes to the sluggishness of compact cars."
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