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● In May, 5,626 small cars registered, a sharp 37.4% drop compared to last year... Concerns rise that this year may see fewer than 70,000 registrations.
● The preference for larger vehicles and the absence of new models have led to stagnation, with manufacturers also turning away from small cars.
● Once a national favorite, small cars are now being ignored by both consumers and manufacturers.
Hello.
I am Uniji (Yuka Post), an automotive influencer.
Despite the economic downturn, demand for larger vehicles remains strong, while the small car market continues to decline. Following last year's trend, small car sales have plummeted this year, raising concerns that annual sales may fall below 70,000 units.
According to Kaizu Data Research Institute on the 8th, the total number of newly registered small cars in the domestic market in May reached 5,626, marking a staggering 37.4% decrease from 8,988 units in the same month last year. This slump has persisted since the beginning of the year. The cumulative number of small car registrations from January to May totaled 30,809, down 33.8% compared to 46,517 units during the same period last year.
If this trend continues until the end of the year, the total sales of small cars are expected to struggle to reach 70,000 units. Last year, the number of small car registrations decreased by 20% to 99,211 units, and this year is projected to record even lower figures.
"Once 210,000 units," the small car market has halved in sales over the past decade.
"Once 210,000 units," the small car market has halved in sales over the past decade.
In the past, small cars enjoyed great popularity as practical urban vehicles. The small car market peaked in 2012 with 216,221 units but has shown a steady decline, dropping to 98,781 units by 2021. However, the introduction of Hyundai's small SUV 'Casper' in September 2021 seemed to spark a brief rebound. In 2022, annual sales increased to 134,294 units, and in 2023, the addition of the Kia Ray EV led to a total of 124,080 units, raising hopes for recovery. Yet, starting in 2024, the small car market has entered another downturn, with analysts predicting it could shrink to more than half of what it was 15 years ago.
Industry insiders cite two main reasons for the small car market's decline. First, consumer preferences have shifted. The demand for leisure-oriented vehicles (RVs) such as SUVs, minivans, and pickup trucks has surged, leading to an overall increase in the size of the vehicle market. As expectations for premium options rise, small cars, which emphasize practicality and price competitiveness, have lost their appeal.
Second, the lack of new models has contributed to the downturn. Since 2022, the only new entry in the small car market has been the Kia Ray EV. Following the discontinuation of the Chevrolet Spark, the domestic small car lineup has been limited to the Morning, Ray, Ray EV, and Casper. Moreover, the Casper Electric (EV) has grown in size, causing it to be classified as a compact car and thus excluded from small car statistics.
Manufacturers say, "It's not profitable," leading companies to turn away from small cars. What solutions do they have?
Manufacturers say, "It's not profitable," leading companies to turn away from small cars. What solutions do they have?
The strategic shift among automotive manufacturers significantly impacts the reduction of small cars. Small cars typically yield lower profit margins, and the high development and certification costs associated with the introduction of eco-friendly powertrains further diminish profitability, given their lower selling prices. Consequently, major manufacturers like Hyundai, Kia, GM Korea, and Renault Korea are focusing their lineups on mid-size sedans, SUVs, and premium electric vehicles. Some interpret the fact that even the 'Casper EV' has strayed from small car standards as a signal that manufacturers are strategically abandoning this segment.
An industry insider stated, "While the recent economic downturn has dampened vehicle demand, fundamentally, small cars fail to meet consumer expectations in terms of product appeal." They added, "The small car market can only recover with a steady supply of competitive new models." There are also predictions that a "reasonable EV small car" aligned with the transition to electric vehicles could be the key to market recovery. Urban EV small cars are already gaining attention in China and Europe, and voices are growing in Korea for policy support alongside the development of related models.
Currently, the representative models in the small car market are the Kia Morning, Ray, Hyundai Casper, and Ray EV, with virtually no alternatives available. In contrast, the large vehicle market offers a plethora of options, from the Kia Carnival Hi-Limousine to the Palisade, Sorento, and mid-size EVs like the Tesla Model Y and Ioniq 5, making it difficult to shift focus to small cars. However, the absence of competition could also signal an opportunity. If manufacturers can create platforms specialized for small EVs, offer lower prices, and ensure ample interior space, market interest could easily return. I would appreciate your valuable opinions in the comments, and I hope you have a pleasant and happy day. This concludes my post.
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