Whether or not you've heard the hit song. “Gangnam Style” which jumped to No. 2 on the Billboard Hot 100 in 2012, it's no secret that South Korea has an obsession with luxury brands.
On the one hand, these intellectual tastes may be reflected in Korean consumers' desire for high-end clothing and cosmetics. Fashion and jewelry houses like LVMH (LVMHF) Christian Dior, Céline, Tiffany & Co. and Bulgari see the Land of the Tigers as a key market in Asia, so much so that brands employ the country's fresh-faced, internationally famous pop stars to serve as brand ambassadors and appear in international advertising. bells.
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Affluent Koreans also have a considerable appetite for expensive Luxury cars. According to data from the Korea Automobile Importers and Distributors Association (KAIDA), more than 26,722 foreign luxury cars priced equivalent to $100,000 were sold in South Korea in 2023, a figure that has tripled since 2019.
While the luxury car market grew at a rapid pace during that four-year period, a recent report shows that car sales from high-end brands such as Bentley, Porsche and Rolls-Royce have plummeted since early 2024. due to a problem that could leave a bad mark on these cars.
According to a report in the Korea Times, purchases of ultra-luxury brands such as Bentley, Porsche and Rolls-Royce have plummeted after new legislation affecting company cars came into force at the beginning of the year.
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The law, which was introduced by the country's Ministry of Land, Infrastructure and Transportation, requires cars priced more than 80 million Korean won, or about $57,945, that are registered to businesses to carry lime green license plates. bright neon signs that clearly indicate that Cars are not privately owned vehicles.
The ministry says the new rule would prevent Korean business owners from evading sales taxes. Under the old rule, Korean business owners and their family members could register expensive cars as company vehicles to pay a lower tax rate than through private channels.
The new ruling seems to be working, as the idea of a new Bentley, Porsche or Rolls carrying a bright green license plate would not only be a fashion faux pas, but also a bright green target for the Korean taxman. As a result, the Korea Times reports that new foreign trademark registrations have dropped sharply.
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Compared to the same period in 2023, new Porsche registrations (EXPLOITED) Vehicles are down 23%, owned by BMW. (BMWAA) Rolls-Royce fell 35% and the worst fall was felt by Volkswagen ownership. (VLKAF) The British ultra-luxury brand Bentley, whose sales have dropped by 77%. Furthermore, in the period from January to March 2024, Lamborghini sales fell by 22% in South Korea.
“Generally speaking, few customers or business owners prefer to purchase vehicles with green plates due to the negative image prevalent in rental and leasing cars,” a brand representative from an unnamed luxury automaker told The Korea Times. “This will weaken the overall sentiment of business owners who plan to purchase luxury cars as fleet vehicles.”
Korea Times statistics show that 40% of total car registrations in 2023 were company vehicles, a figure that has currently dropped to just 28%. However, domestic economic factors are also changing the attitudes of South Korean buyers.
“As the economy shows no immediate signs of recovery, demand for expensive vehicles declines,” an anonymous auto executive told the Korea Times.
“To make matters worse, the regulation also poses a nightmare for supercar makers to accelerate their declining sales results here,” said an executive at another automaker.
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