Six out of ten new cars registered this year are eco-friendly vehicles. The number of electric vehicles (EVs) has more than doubled compared to last year, while registrations of internal combustion engine vehicles have declined.
The Korea Automobile Mobility Industry Association (KAMA) reported on August 4 that the total number of new vehicle registrations in the first half of 2026 reached 850,636, a 1.3% increase from the same period last year.
Despite various challenges, including prolonged high oil prices and exchange rates due to ongoing conflicts in the Middle East and supply chain disruptions, the automotive market has managed to withstand downward pressure. This resilience is attributed to early execution of government EV subsidies, a rush to register vehicles before the expiration of individual consumption tax reductions, and increased demand from corporate and rental businesses.
While the share of individual buyers has decreased by 3.3% compared to the same period last year due to sustained high interest rates, purchases by corporate and rental businesses increased by 10.5% to 296,747 units, providing a crucial support for domestic sales. The shift in purchasing patterns from ownership to service utilization has absorbed the new electric vehicle lineup into the B2B (business-to-business) channel.
In terms of powertrains, electric vehicles (HEV, BEV, FCEV) accounted for 57.8% of the market, solidifying their position as the dominant segment.
Battery electric vehicles (BEVs) surged by 113.6% year-on-year to 198,509 units, achieving a penetration rate of 23.3%, driven by the expansion of affordable EV models and the influx of imported electric vehicles from brands like Tesla and BYD.
Hybrid electric vehicles (HEVs) also maintained a strong presence, with sales of 289,814 units (34.1% market share) despite supply chain issues.
Conversely, the market share of pure internal combustion engine vehicles dropped from 53.7% last year to 42% this year, a decrease of 11.7 percentage points. Notably, diesel vehicle sales plummeted by 59.5% compared to the same period last year due to the discontinuation of certain passenger trims and supply restrictions on some models.
KAMA attributed the rapid growth of electric vehicles this year to the establishment of the 'EV Transition Support Fund,' early execution of subsidies by local governments, and high oil prices.
In fact, registrations of imported vehicles surged by 30.0% year-on-year, capturing a 22.7% share of the domestic market.
The influx of Chinese models from Tesla, BYD, and Polestar has led to China becoming the largest source of imported vehicles, accounting for 41.2% of the total import market share.
German brands, which previously held over half of the imported vehicle market, have seen their share drop to 42.2%, losing their majority status.
While the rapid influx of Chinese electric vehicles has positive aspects, such as lower prices and increased consumer choice, it also poses challenges to domestic manufacturing and intensifies supply chain competition. There is a pressing need to secure price competitiveness for domestic vehicles and establish protective measures for the ecosystem.
KAMA Chairman Jeong Dae-jin stated, "The aggressive push of Chinese electric vehicles in both global and domestic markets poses a serious threat to the manufacturing base and supply chain competitiveness of the domestic automotive industry. To overcome this transitional crisis, it is essential to include electric vehicles in the 'Domestic Production Promotion Tax System' to enhance the competitiveness of the entire domestic production infrastructure and ecosystem."
He added, "There are concerns about demand slowing down due to the depletion of local subsidies, so it is necessary to expedite securing and announcing supplementary budgets for subsidies by local governments in the second half of the year. Continued tax benefits, such as individual consumption tax reductions for eco-friendly vehicles, including HEVs, are essential to maintain momentum during this transitional phase toward electrification."
* This article has been translated by AI.
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