Sales of imported company cars in Korea fell in the first half of the year on toughened tax laws, industry data showed on July 29.
In the January-June period, sales declined 15.8 percent from the same period in 2015, according to the Korea Automobile Importers and Distributors Association. In total, 40,698 units of company cars were sold to account for 34.9 percent of the nation’s imported car sales.
The BMW 520d is cited as one of Korea’s most widely used company cars.
The decline was largely attributed to the tightened tax deduction rules implemented in January to prevent the abuse of corporate vehicles. “The revision has affected related businesses,” an industry official said. “Domestic cars that are more affordable than foreign cars were not as hard-hit.”
The impact was the biggest among cars costing more than 100 million won (US$89,205), which had previously enjoyed double-digit growth.
Company cars with price tags exceeding 100 million won decreased by 25.5 percent on-year to 7,307 units, while sales of cheaper cars shrank by 13.3 percent to 33,391 units.
In particular, Audi took the heaviest blow, selling 386 units of company cars in the first half of the year, down 51.6 percent from 798 units in 2015.
Sales of Mercedes-Benz fell 39 percent from 5,438 units to 3,319 units, while those of Porsche saw a 22.1 percent fall from 675 to 526 units
Meanwhile, sales of imported cars used for non-corporate purposes rose 6.4 percent in the same period, reaching 76,051 units.
Under the revised law, the government now recognizes 8 million won as a legitimate expense of the cars registered for business -- which includes fuel, repair costs, insurance and tax payments. In the past, companies were able to claim 20 percent of the car’s price tag as expense, allowing businesses to purchase luxury cars with a lighter tax burden.
By Ahn Sung-mi (email@example.com