Auto makers in Korea are getting a modest marketing assist from a 30% reduction in the country’s special luxury-goods excise tax.
In some cases, the excise tax cut translates to an immediate price discount of 1.32 million won ($1,000) or more, depending on vehicle price and engine displacement.
The tax rate at the high end of the scale for vehicles with engines displacing 2L or more has been cut from 10% to 7%, effective immediately.
On vehicles with engines more than 1L in size but smaller than 2L, the tax is cut from 5% to 3.5%.
The reductions will remain in effect through June.
“We welcome the decision by the Korean government to cut special excise taxes on passenger cars, given the current difficult domestic-market situation,” the Korea Auto Manufacturers Assn., which lobbies for all five of Korea’s domestic auto makers, says in a statement. “We believe that it will help boost demand.
“Additionally, we would like to see our proposals for providing financial support to customers and the abolition of the environmental-preservation fee that was placed on diesel cars to be implemented in order to further stimulate the domestic auto market.”
A Hyundai Motor Co. Ltd. insider tells Ward’s the auto maker hopes the tax cuts “will do the trick and bring people back into the showroom. Sales, particularly among SUVs, are at a standstill.
“It’s only a temporary measure and will be rolled back after June, but it will be a relief for Korean drivers, who are known to be the most highly taxed in the world.”
