Luxury car sales in Korea have taken a nosedive following the government's implementation of a rule requiring green license plates for company cars valued at over 80 million won ($57,800). The regulation, enforced by the Ministry of Land, Infrastructure and Transport since the beginning of 2024, aims to prevent business owners from using supercars as company vehicles to evade taxes.
Data from the Korea Automobile Importers & Distributors Association (KAIDA) revealed a 31.4% decrease in newly registered luxury imported vehicles in March compared to the previous year. Bentley, Porsche, and Rolls-Royce were particularly hard hit, with Bentley registrations plummeting by 77.4% in the first quarter, and Rolls-Royce and Porsche reporting declines of 35.2% and 22.9%, respectively, during the same period.
The introduction of green license plates seems to have deterred buyers, as they are associated with rental and lease cars, carrying a negative image. This has weakened the appeal of luxury cars as fleet vehicles for businesses.
Moreover, data shows a sharp decline in the proportion of registered company vehicles out of the total imported cars in Korea. While 25,263 imported cars were registered in March, marking a 6% increase from the previous year, the portion of company cars fell to 28.4%, below the 30% mark for the first time. Last year, imported company-owned vehicles accounted for nearly 40% of total registrations.
Sales of Lamborghini cars also suffered, declining by 22.2% in the first quarter compared to a year earlier, as the green plate rule impacted their sales strategy, with 90% of their vehicles sold as fleet cars in Korea last year. Rolls-Royce also faced a decline of 13% in registrations for the same period.
While the green license plate rule has had a significant impact, some industry insiders attribute the sharp decline in luxury car sales to a combination of economic downturn and the new regulation.
“As the economy is showing no immediate signs of a rebound, demand for pricey vehicles declines," said an executive from an unnamed automaker. "To make matters worse, the regulation also comes as a bane for such supercar makers to rev up their diminishing sales performance here,” another executive from a different brand noted.
Overall, the introduction of the green license plate rule has dramatically affected the luxury car market in Korea, prompting a substantial decrease in sales for Bentley, Porsche, Rolls-Royce, and other high-end car brands.
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