August 13, 2019 08:40
The global car market is shrinking as demand for fuel-powered vehicles dwindles and consumer priorities change.
According to market information provider LMC Automotive, global car sales in the first half of this year dropped 6.6 percent from a year ago to 45.16 million cars. A drop was predictable given the slowing global economy, but the size of the plunge came as a shock as predictions had varied between one to three percent.
In China, the world's largest market, car sales plummeted 12.4 percent on-year and in India 10.3 percent. Advanced economies such as the U.S. and Europe also witnessed a drop of 2.4 and 3.1 percent.
In Korea, car sales fell 6.1 percent. China's economy grew 6.6 percent last year, the lowest in 28 years, and this year's forecast is even lower at 6.2 percent.
In Europe, Brexit uncertainties slowed the economy down, but environmental regulations also cut into sales as diesel cars, which were the strong point of European carmakers, are being forced out of the market. The U.S. is the only place where the car industry is still doing well, but even there sales are dwindling.
Lee Hang-koo at the Korea Institute for Industrial Economics and Trade said, "After the 2009 financial crisis, the auto industry enjoyed a long-term boom, so you could say that anyone who wanted to buy a car has already done it." Car prices rose significantly during the boom to a record US$37,000, so now buying used cars is a more attractive option.
"The auto industry is changing with the popularity of car sharing platforms," said Kim Ki-chan at Catholic University of Korea. Amid declining demand for fuel-powered vehicles, carmakers are spending their money on research and development and cutting down production facilities and personnel.
Layoffs announced by major carmakers like GM, Ford and Volkswagen in the last six months indicate that at least 48,000 people around the world will lose their jobs. The costs saved on personnel will be invested in developing future cars such as electric vehicles and automated vehicles.
Koh Tae-bong at Hi Investment and Securities said, "Many consumers believe it is better to wait for electric cars rather than buying a new fuel-powered car now. For car-sharing businesses, EVs are much cheaper to maintain, so there is a huge demand for them."
Kim Pil-soo at Daelim College said, "Korean carmakers need to speed up development of environmentally friendly and high-performance cars."
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