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In August, there was a surprising shift in the rankings of domestic car sales. The protagonist? Compact cars, which refer to cars with engine capacities of less than 1000cc. Currently, there are three types of compact cars sold in the domestic market: the Ray, Casper, and Morning. All three have made it into the top 10 best-selling cars. Once in the spotlight as the entry car (the first car purchased in one’s lifetime) for the 2030 generation, compact cars lost their popularity in the midst of imported and luxury car trends. Now, it seems that compact cars are making a comeback.
This sudden phenomenon didn’t just happen last month. Compact car sales saw a continuous decline for nine years since 2012 when they recorded 216,221 units. By 2021, the number had plummeted to 98,781 units. However, it made a turnaround last year, reaching 134,294 units. In particular, the industry has noticed a unique trend where compact car purchases that used to be concentrated in February and March, during the admission and employment seasons when entry-level cars were in demand, have now shifted to August, leading to an unusually high sales volume.
◇ Consumer Preferences Changing for Compact Cars
According to the Ministry of Land, Infrastructure, and Transport, the number of domestic compact car registrations last month reached 12,278 units, marking a 3.7 percent increase compared to the previous month. Considering that overall vehicle sales in August dropped by 11.6 percent compared to the previous month, it can be observed that sales for other vehicle segments, excluding compact cars, declined. When looking at individual models, the Ray secured the 6th position with 3,793 units sold, Casper claimed the 7th spot with 3,692 units, and the Morning registered 2,762 units to rank 10th.
Experts in the automotive industry attribute this phenomenon to a combination of factors, including increased part-time employment among the 4050 generation due to economic downturn, the growing popularity of camping culture, and a shift towards more economical consumer behavior. Analyzing data of compact car buyers with the automotive research firm “CarIsYou Data Lab,” it was found that from January to August this year, compact cars were predominantly purchased by people in their 40s (17,208 units), followed by those in their 50s (15,808 units), 30s (14,030 units), and 20s (5,267 units). The 4050 generation accounted for over half (51.6 percent) of all compact car purchases.
Recently, in the early morning hours, it’s not uncommon to see the 4050s delivering packages in apartment complexes. Many of them are making extensive use of compact cars. According to data from the job-seeking website “Alba Heaven,” part-time job applications from the 4050 generation in the first quarter of this year increased significantly compared to the same period last year, with a 294.3 percent increase in applications for people in their forties (from 36,216 to 142,344 applications) and a 100.3 percent increase for those in their fifties (from 2,138,03 to 4,282,02 applications).
Among compact cars, it’s models like the Ray and SUVs like the Casper, known for their spacious interiors, that are gaining popularity for this very reason. In automotive and delivery communities, there are many recommendations for compact cars, especially those that offer ample cargo space and are optimized for reducing fuel costs that come from frequent travel due to deliveries. Kim, a delivery driver for Coupang in his fifties, stated, “With high interest rates and the recent surge in fuel prices, I had no choice but to go for a compact car.” Some analysts in the industry even suggest that models like the Ray and Casper are filling the gap left by discontinued commercial vehicles like the Damas and Labo.”
Compact cars are also gaining popularity as camping vehicles. When the second row of these vehicles is folded down, it creates a space where two adults can lie down comfortably. The Ray, in particular, has received praise for its flat floor, which is often considered the top criterion for camping cars, and its spacious interior that rivals midsize SUVs. Additionally, it’s possible to attach camping tents and other equipment to these cars. A Kia dealership representative in Seoul mentioned, “There is also a growing number of people looking for compact cars as their second car.”
◇Launch of Affordable Electric Cars Fueling Compact Car Popularity
The successive releases of affordable electric cars are also contributing to the popularity of compact cars. According to experts, considering battery performance and prices, smaller cars are still more favorable for sales than larger SUVs. Following Kia’s recent launch of the SUV EV5 priced in the ￦20 million range in China, they are also developing smaller EV3 and EV4 models (US$1=￦1336). Hyundai, through GGM, is to begin production of the Casper electric car next year. Given these trends, the popularity of compact cars is likely to continue for the time being.
Global companies are also rushing to develop affordable compact electric cars. GM’s CEO, Mary Barra, stated, “Reducing the price to below $30,000 is crucial for increasing electric car sales.” GM is on the verge of launching the Equinox EV in the $30,000 range, and this vehicle is produced in Mexico to lower costs. Volkswagen and Tesla have also entered the development of small SUVs in the $20,000 range. Professor Kim Pil-soo from Daelim University’s Automotive Engineering Department remarked, “Due to economic stagnation, rising fuel prices, and reductions in electric car subsidies, the popularity of compact cars is likely to continue for some time.”
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