South Korea’s domestic car sales in July-September period plunged by the biggest pace in four years due to strikes at automakers and the termination of special tax benefit for motor vehicles in June.

According to Korea Automobile Manufacturers Association (KAMA) on Friday, combined domestic vehicle sales of the nation’s five major carmakers - Hyundai Motor Co., Kia Motors Corp., GM Korea Co., Renault Samsung Motors Co. and Ssangyong Motor Co. - reached 342,774 units in the third quarter, down 11.2 percent from 386,294 units in the same period of last year. The domestic vehicle sales in the third quarter fell year-on-year for the first time since fourth quarter in 2013. The figure of 11.2 percent is the largest drop since third quarter in 2012.

According to the automobile industry, the drop owes much to the expiration of special sales tax deduction on motor vehicles. The government reduced special sales tax on vehicles by 1.5 percent from September last year to June this year to boost domestic consumption. Sales stooped sharply from July. Lengthy strikes at some carmakers have added woes. The 24 rounds of strikes of Hyundai Motor between July 19 and September 30 have cost the company 2.9 trillion won ($2.6 billion) in sales losses. GM Korea went on a strike for two weeks in August, which caused losses of 10,000 units. “Usually, third quarter is off-season for car sales but car sales have particularly deteriorated in this year’s third quarter due to a series of unfavorable factors,” said an official of the industry.

According to Korea Automobile Importers & Distributors Association (KAIDA), import car sales came to 16,778 units in September, down 17.7 percent year-on-year. Sales suspension of Volkswagen car models of Audi Volkswagen Korea as well as the expiration of tax benefit weighed on foreign car brands as well.

By Noh Won-myung

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