Synopsis
As per the latest report, South Korea has dropped to seventh place globally in domestic vehicle output for 2024, reflecting a decrease in production due to economic challenges. The country produced 4.13 million units, down from 4.24 million, amidst high inflation and interest rates impacting consumer demand.Key Takeaways
- South Korea ranks 7th in global vehicle output.
- Domestic vehicle production fell to 4.13 million units.
- High inflation and interest rates affected consumer sentiment.
- Local demand and potential U.S. tariffs pose challenges.
- Future projections indicate further declines in production.
Seoul, March 10 (NationPress) South Korea secured the seventh position globally in domestic vehicle production last year, as reported by an industry association on Monday. This marks a decline of one position from the previous year, attributed to a decrease in output amid an economic downturn.
The nation's car manufacturing dropped to 4.13 million units in 2024, down from 4.24 million in the previous year, largely due to a slowdown in local consumption, according to a report from the Korea Automobile & Mobility Association (KAMA).
Factors such as high inflation and increased interest rates negatively impacted consumer confidence in 2024, leading to reduced vehicle sales in the domestic market, as highlighted in the KAMA report, with details reported by Yonhap news agency.
A KAMA official noted, "The ongoing combination of weak domestic demand and potential U.S. tariffs on vehicle exports to the United States may continue to impact local production negatively." The official urged the government to extend greater tax incentives for local manufacturers of next-generation vehicles and for investments in facilities to mitigate the adverse effects of declining production on associated industries.
China, the United States, Japan, and India remained the top four countries for car manufacturing last year, producing 31.28 million, 10.56 million, 8.23 million, and 6.01 million units respectively, as per the report.
Globally, the total vehicle production experienced a 0.5 percent decline, totaling 93.95 million units in the past year, marking the first yearly decrease since 2020 when production fell by 15.4 percent due to the COVID-19 pandemic.
Looking ahead, South Korea's auto industry is projected to experience further declines in both domestic sales and production this year, as indicated by an industry analysis conducted last year.
The analysis from the Korea Automobile Manufacturers Association (KAMA) anticipates that domestic car sales and overall vehicle production for 2024 will reach 1.7 million units and 4.22 million units, respectively.
These projections reflect a decrease of 2.8 percent and 0.6 percent from the previous year.
KAMA indicated that domestic sales are likely to decline due to diminished demand for new vehicles, stemming from high interest rates and lower disposable income. Additionally, the anticipated reduction in electric vehicle subsidies is expected to further affect demand.
