Luxury car sales up 52 percent last year

Luxury car sales up 52 percent last year

Sales of luxury cars priced over 100 million won topped the 20,000 mark last year for the first time ever, according to industry data, Friday.

The sales of luxury cars including supercars reached 22,844 last year, up 52.5 percent from the previous year, the Korea Importers and Distributors Association data showed.

Sales growth of luxury cars is more than twice that of imported cars overall, which was a 24.2 percent increase last year. The growth rate of luxury cars in 2014 was 33.2 percent.

The portion of high-priced cars, out of all imported cars sales, increased last year to 9.4 percent from 7.6 percent in 2014.

Industry watchers say that customers hastened their purchases that led to record sales, as the government has revised the tax system this year, limiting the tax benefits of drivers who register luxury imported cars under corporate names.

Under the previous system, drivers of corporate cars could claim 20 percent of the total car price as business costs and receive the appropriate tax deduction each year. The owner would have to wait five years to file the total cost of the car and get the full tax break for the purchase.

Under the new system the owner can register up to 8 million won as purchase costs, meaning that an owner of a 200 million won car would now have to wait 25 years until the full purchase price could be deducted for tax purposes.

Over 80 percent of imported luxury cars or 18,370 cars were sold to corporations last year, up 2.7 percent from the previous year. Among them were supercars which could hardly be seen as corporate cars. Of four Lamborghini cars sold last year in Korea, whose unit price goes over 400 million, three were registered to corporations.

Out of all 49 Porsche 911 turbos sold, priced at over 200 million, 42 were sold to corporations, while 91.6 percent of Mercedes-Maybach sales or 869 cars were to corporations.

In spite of the new tax system, luxury imported car sales to corporations don’t seem to have slowed as much as the government expected, say industry watchers.

“Because the new tax system didn’t set the total deduction limit, nothing much has changed,” said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade. “Just like in the U.S. and Canada, we should have adopted a system which limits the total deduction depending on the price of the car owned by a corporation. Since the corporate car market has constant demand, without strong control over it nothing will change much. The demand for supercars is here to stay.”

Meanwhile, the sales of domestic luxury cars priced over 100 million won reached less than 1,000. Hyundai Motor’s Equus took nearly half of the total sales, selling 458 cars last year.

Source: http://www.koreatimes.co.kr/www/news/biz/2016/02/388_196748.html

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