Yonhap reported that South Korean government has unveiled a program to help the troubled auto industry, offering big tax cuts to consumers who buy new cars after selling or scraping their old vehicles.
The package, announced by the ministry of knowledge economy, also calls for the government to provide more liquidity to auto financing firms and help support research and development for more fuel efficient vehicles. The program, set to be put into force on May 1st 2009 and remain in effect until the year's end, calls for up to 70% cuts in consumption, registration and acquisition taxes for those who buy new cars after selling or scraping their cars registered before December 31st 1999.
The tax benefits, which officials said would amount to up to KRW 2.5 million per car, will only be available to those who own such old vehicles as of April 12th 2009. Of the 16.79 million vehicles registered in the country at the end of 2008, 5.48 million will be eligible for the benefit.
Mr Rim Che min vice knowledge economy minister said that "The decision has been made after a comprehensive review of market conditions and need to help stabilize the industry that provides direct and indirect work for 1.6 million people."
South Korea's auto industry reported an 18.7% YoY drop in production in March. Exports fell by 37.9% YoY in the first two months of this year as compared with the same period last year.
Hyundai Motor Co, Kia Motors Corporation and Renault Samsung Motors seem to be doing better than their foreign owned competitors, according to industry executives. Ssangyong Motor Co under court receivership and GM Daewoo Auto & Technology Co are facing stiffer challenges and looking to the government for rescue funds.
