Corporate vehicle sales in South Korea have experienced a notable downturn this year, especially among high-end imported models. This decline is largely attributed to a new government policy designed to curb tax abuses, specifically the introduction of lime green license plates for costly corporate-owned cars. The policy, which took effect in January 2024, aims to distinguish business vehicles from personal ones, potentially impacting the luxury car market.
According to data from the Carisyou Data Research Institute, registrations of corporate vehicles priced over 80 million won (approximately $59,600) fell by 27.7 percent between January and July this year compared to the same period last year, a decrease of over 10,000 units. The new policy directly targets corporate vehicles exceeding this price threshold. South Korean businesses have long taken advantage of a tax loophole allowing them to write off the full cost of luxury cars as business expenses, fueling demand for high-end and imported cars.
The new regulation has particularly affected the sales of popular luxury models. The Mercedes-Benz S-Class, a favored sedan among South Korea’s business elite, saw sales plummet by 63.9 percent during the same period. This decline underscores the government’s intent to address tax avoidance within the corporate sector.
The downturn extends to ultra-luxury brands that cost over 100 million won. Porsche’s corporate sales decreased by 47.0 percent, while Bentley experienced a more significant impact, with a 65 percent drop.
During the world premiere in Seoul on September 11, Christian Schlick, the brand director of Bentley Motors Korea, acknowledged the effect of the lime green plate system, while noting the influence of broader economic conditions. “High-end products like ours are very sensitive to macroeconomic conditions,” he stated. Schlick added that luxury buyers might be less concerned about the conspicuous lime green plates on a Bentley, because that brand is generally associated with business ownership. In contrast, a brand like Mercedes-Benz, which is frequently used for personal vehicles, might see reticence among buyers who prefer to avoid drawing attention.
Other ultra-luxury brands faced similar declines: Maserati sales fell 42.2 percent, Rolls-Royce sales decreased 44.4 percent, and McLaren saw an 85.0 percent plunge. Aston Martin recorded only one corporate sale through August, while Lamborghini and Ferrari saw smaller decreases. The data suggests a significant shift in the luxury vehicle market.
Another contributing factor to the slowdown was a pre-emptive rush to purchase luxury corporate vehicles before the lime green plate system was implemented. This trend was sparked by discussions during President Yoon Seok Yeol’s 2022 election campaign. In December 2023, corporate cars accounted for 46.5 percent of all imported vehicle sales. A car dealer from one of the major import brands stated that many businesses likely purchased vehicles before the policy took effect to avoid the new plate system, contributing to lower corporate registrations this year.
