A Rolls-Royce Phantom with a pattern lime inexperienced license plate, a part of a brand new Korean authorities coverage to curb tax abuses on corporate-owned luxurious automobiles (Newsis)
Company automobile gross sales in South Korea proceed to plunge this yr, significantly amongst high-end imported fashions, due largely to a brand new authorities coverage geared toward curbing tax abuses. The introduction of lime inexperienced license plates for pricey corporate-owned automobiles, efficient January 2024, is seen as a main issue behind the sharp decline.
In line with knowledge from the Carisyou Knowledge Analysis Institute, registrations of company automobiles priced over 80 million gained (roughly $59,600) fell by 27.7 p.c between January and July this yr in comparison with the identical interval final yr. This marks a lower of over 10,000 items, bringing complete registrations right down to 27,400. The decline is intently tied to the federal government’s new coverage, which particularly targets corporate-owned automobiles exceeding 80 million gained.
The lime inexperienced license plates distinguish company automobiles from privately owned ones, which proceed to make use of the normal white plates. The coverage is designed to discourage corporations from exploiting tax deductions meant for business-use automobiles. Companies can declare as much as 8 million gained yearly for company automobiles, with no restrict on the whole deductible quantity over time. This loophole has allowed corporations to write down off the complete price of luxurious automobiles as enterprise bills, fueling demand for high-end and imported automobiles for a very long time.
Mercedes-Benz S-Class (Mercedes-Benz Korea)
The gross sales of in style luxurious fashions have notably suffered underneath the brand new system. The Mercedes-Benz S-Class, a flagship sedan in style with South Korea’s enterprise elite, skilled a steep decline, with January-July gross sales down 63.9 p.c to 1,843 items.
The luxurious automobile downturn extends to ultra-luxury manufacturers that price over 100 million gained. Porsche’s company gross sales fell by 47.0 p.c, registering 2,219 items, whereas Bentley was hit even tougher, with a 65 p.c lower, registering solely 123 automobiles in comparison with 351 the yr earlier than.
Talking on the world premiere of the fourth-generation Bentley Flying Spur Velocity in Seoul on Sep. 11, Christian Schlick, the model director of Bentley Motors Korea, acknowledged that whereas the lime inexperienced plate system has had some affect, broader financial situations additionally play a big position.
“Excessive-end merchandise like ours are very delicate to macroeconomic situations,” he mentioned. He added that luxurious patrons could also be much less involved in regards to the conspicuous lime inexperienced plates on a Bentley, because the model is already strongly related to company possession. In distinction, a model like Mercedes-Benz, which is extra ceaselessly used for private automobiles, may see extra hesitation from patrons who wish to keep away from standing out.
The brand new fourth-generation Bentley Flying Spur Velocity plug-in hybrid, beginning at 375.7 million gained
Different ultra-luxury manufacturers noticed comparable declines: Maserati gross sales dropped 42.2 p.c, Rolls-Royce fell 44.4 p.c, and McLaren gross sales plunged by 85.0 p.c. Aston Martin, which bought 26 automobiles in the identical interval final yr, registered just one company sale by means of August. Lamborghini and Ferrari noticed smaller drops, down 1.0 p.c and 5.7 p.c, respectively.
One other key issue on this yr’s slowdown was a rush to purchase luxurious company automobiles earlier than the lime inexperienced plate system went into impact. The coverage had been broadly mentioned throughout President Yoon Seok Yeol’s 2022 election marketing campaign, prompting companies to buy automobiles earlier than the January 2024 implementation. In December 2023, company automobiles accounted for 46.5 p.c of all imported automobile gross sales, a big enhance from the common, as companies sought to keep away from the brand new plate system.
“Many companies that didn’t need their automobiles to face out with lime inexperienced plates possible bought them earlier than the coverage got here into impact. That rush has naturally led to fewer company registrations this yr,” mentioned a seller from one of many main import automobile manufacturers in Korea.
