Auto size second only to U.S.
Nearly three out of every 10 passenger in South Korea have engines with displacement larger than 2.0 liters. The sales of these usually larger-sized cars has increased about sixfold during the past eight years, reaching the second highest level after the United States.
According to a report by the Korea Institute for Industrial Economics and Trade (KIET) issued on October 26, cars with a more-than 2.0 liter engine (equivalent to 2,000 cubic centimeters (cc) of displacement) made up just 4.3 percent of the total cars sold in South Korea in 1998. The figure increased to 14 percent in 2002 and 24.3 percent for the first seven months of this year. If the sales of sports utility vehicles (SUVs) are included, the figure goes up to 30.5 percent.
Preference for bigger cars is unique to Korea and the U.S. In Germany, only 21.1 percent of passenger cars have engine displacement of 2.0 liters or more and in Japan, only 20.5 percent. In the case of France and Italy, the figure is much lower. Small cars with engine displacement of less than 1.5 liters make up 11.5 percent of the cars on the road in Korea, whereas they make up 61.2 percent of the cars in Japan, 55.3 percent of the cars in Italy, and 52.1 percent of the cars in the United Kingdom.
Regarding the trend of South Koreans preferring bigger cars, industry experts have mentioned reasons such as the income polarization seen after the 1997-98 financial crisis and a reduction in tax incentives for owning smaller cars.
Jo Cheol, a KIET researcher, said that consumers’ desire to show off their cars has become another factor. According to a survey performed by the Korea Automobile Manufacturers Association, about 45.3 percent of the respondents replied "Yes" to a question asking, "Do you think that a person’s car tells his or her social status?" Experts stress that to continuously survive in the increasingly competitive world auto market, it is essential to develop small cars with a competitive edge. In the case of Japanese carmakers like Toyota and Honda, they were able to gain the competitive edge in the market by being the pioneers in the small-car market. For people who once have owned bigger cars, it is extremely unlikely they will return to owning smaller cars, they continued. Therefore, it is urgent for the government to take bold measures, such as offering exceptional tax benefits and allowing LPG fuel for smaller cars, they said.
