Market Trends of south korea mlcc Industry
There is a shift toward the electrification of light commercial vehicles in South Korea
- South Korea is witnessing a shift toward electrification for light commercial vehicles, which is becoming evident even in the domestic market. The country produced 25.83 thousand light commercial vehicles in 2019.
- In terms of market share, South Korea continued to lead in 2022, with 27% of LCV sales being electric (36,000 vehicles). However, sales growth in 2022 slowed to half its level in the previous year. This decline may be due to changes to the subsidy scheme for LCVs and the repealing of a policy in April 2022 that made obtaining commercial registration permits easier for electric LCVs than ICE models.
- For electric LCVs, the incentives per vehicle decreased from USD 10,800 to USD 9,300 in 2023. However, with around 30% more subsidized passenger cars and commercial vehicles, total government funding for electric LDV subsidies increased from USD 1.2 billion in 2022 to USD 1.3 billion in 2023. In April 2022, South Korea ended its policy of free light commercial vehicle (LCV) registration. However, it has remained a leader in electric LCV deployment in the same years, averaging 27% of sales over the year. These factors increased the overall production of light commercial vehicles to 75.27 thousand units in 2022.
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Increasing demand to achieve advanced hydrogen economy
- South Korea is the seventh-largest market worldwide by vehicle sales and the fifth-largest producer of passenger cars in the global automotive industry. The country produced 3.61 million units of passenger cars in 2019.
- The passenger vehicle segment witnessed a Y-o-Y drop of 11.10% in terms of production as several manufacturers took measures to reduce their production in response to the parts shortages caused by the events taking place in China due to the COVID-19 pandemic.
- South Korea is shifting toward electric cars, and it increased the production of electric passenger cars to 3.43 million units in 2022. In Korea, the government promotes EVs by applying higher subsidy amounts to vehicles with a higher full electric range. The maximum passenger car incentives decreased from USD 5,400 to USD 5,300 in 2023, though consumers can also benefit from local subsidies. The transition to electric mobility is rising and may continue to shift trade balances. South Korea is a net exporter of electric cars, electric motors, and Li-ion batteries. It is well-positioned to benefit from the growing electric car market.
- In 2022, the stock of fuel cell electric vehicles (FCEVs) increased, and about 80% of the FCEVs are cars. The country is now home to over half of all fuel-cell cars globally. Two-thirds of the additional 15,000 fuel cell cars that hit the road in 2022 were in South Korea, partly attributed to a policy landscape that supports FCEV production and sales. This trend has also led Hyundai to become the top fuel cell automaker. Focused on FCEV and full cells for power generation, South Korea is aiming to achieve an advanced hydrogen economy in the future, which may increase the production of passenger vehicles.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Increasing adoption of hydrogen fuel cell buses is boosting the market's growth
- Supporting government subsidies and policies for EVs
- The increasing usage of other devices like notebooks and smartphones resulted in a decline in the sales of desktop PCs
- The slack in consumer demand due to inflationary pressures and the increasing usage of smartphones hindered the market’s growth
- The increasing amount of data traffic and affordable 5G smartphones are driving the demand in the country
- The increasing demand for smartphones resulted in tablets sales decline
- Rise in aging population
- Stringent emission policies are hindering the production of heavy trucks
- The South Korean government’s energy-saving initiatives to reduce carbon emissions are driving the sales of air conditioners
- The high-speed internet penetration, rising gaming subscription rates, and growing young population are driving the demand for gaming consoles
- The higher costs and a delay in construction projects resulted in a decline in refrigerator sales
- The increasing usage of smartphones with high storage capabilities resulted in decline in storage unit sales
- The innovative sleek TV designs, advanced features, stringent manufacturing regulations are driving the demand
- Increased minimum wage is expected to increase the sales of service robots in South Korea
