South Korea

Last modification: 29 Aug 17
Introduction: 

South Korea, officially the Republic of Korea is a sovereign state in East Asia.

Chapter 1: Economic and business environment

Demographics

25.155.320 people

Capital

Seoul
Half of the population lives in the Seoul Capital Area.

Major cities

Busan, Incheon, Daegu

Languages

Korean (ko-KR), English (en)

GDP

27,221.52 USD (2015)

Unemployment rate

4,9% in 2016

Main industries

GDP Composition by Sector:
- Agriculture (3 percent)
- Industry (39.4 percent)
- Services (57.6 percent)

Industrial Production Growth Rate: 4.3 percent
Industries: electronics, telecommunications, automobile production, chemicals, shipbuilding, steel

Currency

 KRW South Korean won

Interest rate

2%

Inflation

2% in 2017

Chapter 2 : Automotive market, segments & sales

Total Car park

459 cars per 1000 inhabitants

New vehicle registrations (Cars, LCV, Trucks)

New Car Sales 2015 : 1,725,387

Top 5 brands (total market)

1. Hyundai
2. Kia
3. GM Korea
4. Samsung Renault
5. Ssanyong

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales

The business car sector in South Korea represents about 10% of the total automotive market. Around 350.000 vehicles were sold as commercial vehicles in 2016. *
 

Top 5 fleet brands (fleet market)

The Korean car manufacturers Hyundai-Kia represents 70% of the market share. 
1. Hyundai
2. Kia
3. Renault
4. GM Korea

Chapter 4: Taxation & legislation

4.1 Car Taxation Vehicles are submitted to various taxations : Individual Consumption Tax, Education Tax, VAT, Acquisition Tax, Transportation-Energy-Environment Tax, Motor Fuel Tax
4.2 Income tax – Taxable persons Any person who has registered a vehicle is obliged to file taxes. Tax deduction is granted under conditions
4.3 Company car  
4.4 Income taxes – drivers’ personal taxation If an employee uses a company car for his own purpose, the cost incurred related to the car shall be regarded as additional remuneration for the employee and individual income tax will be imposed.
4.5 Electric vehicles  
4.6 Future developments Company car deductions are to be improved
4.7 Legal background (import taxes) Imported vehicles are submitted to both Custom Duty and Import VAT. In addition, Individual Consumption Tax is applicable

Chapter 5: Car policies

Company Car Entitlement
Company cars are assigned to top management as part of their compensation package or as a tool of the trade for corporate sales people.

Which sectors provide most fleet cars? 

Which job functions often include a company car? 

Reference cars
 

Entry level/ Junior sales na
Senior sales / management level Hyundai Sonata
K5
Hyundai Avante
Kia Sorrento
 

S-Class
Mercedes E-Class

 

Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement)  
Type of suppliers (captive versus multibrand, international versus local…)  
6.1 Outright purchase:  
Definition Vehicle is a fixed tangible asset at acquisition cost, depreciated over its useful life
Pro’s and con’s  
Economic & legal ownership Full ownership, included Risks asd Rewards
Business practices  
6.2 Renting (Finance lease) :  
Definition Also called Capital Lease Agreement. The vehicle is recognized as an asset and liability on the balance sheet
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.3 Full service leasing (operational leasing)  
Definition Vehicle is not considered an asset on the balance sheet and the lease payments are treated as expenses on the P&L
Pro’s and con’s  
Economic & legal ownership Ownership remains with the lessor
Business practices  
6.4 Fleet Management  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.5 Short term rental  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.6 Other funding methods  
   

Chapter 7: Fuel

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Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics

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Chapter 10: Environment

There have been recent efforts to deal with environmental problems, including a government run $84 billion five-year green growth project that aims to boost energy efficiency and green technology. The green-based economic strategy is a comprehensive overhaul of South Korea's economy, utilizing nearly two percent of the national GDP. The greening initiative includes such efforts as a nationwide bike network, solar and wind energy, lowering oil dependent vehicles, backing daylight savings and extensive usage of environmentally friendly technologies such as LEDs in electronics and lighting.

Chapter 11: Mobility

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Chapter 12: Key trends to watch

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