Sales are poised to grow by an average of 2.2% annually from 2019-2027.
The year 2019 will be another challenging period to the South Korean passenger vehicle sales as demand is expected to shrink to 4.8%, driven by the country’s high youth employment levels, according to Fitch Solutions.
New passenger vehicle sales is predicted to slip at an average of 2.2% annually in the period between 2019-2027 as the country’s unemployed youth hold back larger purchases to a time when a more stable stream of income is assured.
The nation’s staggering household debt also brings challenges to future car sales as household debt stood at approximately 95% of GDP in 2017, data from the Bank for International Settlements show.
“[W]e believe that the high level of household indebtedness will force consumers to be more cautious when making purchases, and believe that the demand for cars will fall as consumers delay their purchases to repay debts,” added Fitch Solutions.
Even though Fitch Solutions predicts that the country’s economy will grow 2.3% by end-2019, passenger vehicle sales are likely to remain subdued as Korea’s car market has already peaked in 2016.
“South Korea's economic growth outlook remains dim in 2019 and we believe that it will fail to trickle down to consumers' willingness to buy cars as they will have to contend with the increased cost of debt and their debt repayments.”
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