Sales of luxury cars in South Korea have dropped significantly after the government introduced new labeling rules for such cars. It is now required that all company cars worth more than $58 thousand have a neon green license plate. This is the government’s attempt to stop tax evasion.
The fact is that company executives use company cars for their own purposes. In this case, the purchase of vehicles, fuel and maintenance costs are passed on to the companies. This reduces corporate operating profits and, consequently, taxes.
Two years ago, President Yun Suk-yol promised during the election to stop the use of luxury cars for private purposes. The bright green license plates were designed to clearly identify company cars to the public and deter people from using them privately.
Last year, corporate registrations accounted for more than 70% of sales of top models of such automakers as Bentley, Lamborghini and Rolls-Royce in Korea. This is evidenced by data from the Korea Association of Importers and Distributors of Automobiles (KAIDA). However, after the introduction of green license plates in January, the number of foreign luxury cars worth more than 80 million won ($58 thousand) that were registered as company cars fell by 27%.
According to KAIDA, sales of Bentley cars in Korea in the first quarter fell by 77% compared to the same period last year. At the same time, sales of Rolls-Royce and Porsche cars fell by 35% and 23%, respectively. Sales of Lamborghini, which accounted for 90% of company cars last year, fell by 22%.
Sales of luxury cars are expected to slow further as green license plates attract negative attention.
«People will be upset when they see supercars with green license plates in entertainment, shopping, or golf resorts,» said Lee Han-koo of the South Korean research team at the Chonbuk Institute for Automotive Convergence.
Source: ft