[THE INVESTOR] South Korea’s automobile market will shrink for the first time since 2013, the Korea Automotive Research Institute forecast in a report on July 21.

The Hyundai Motor Group’s think tank estimated an 8.7 percent drop in domestic sales during the second half of the year, offsetting the large increase seen in the first six months of the year. 

According to the institute’s estimates, the year-on-year drop expected in the second half will lead to annual sales falling 0.5 percent compared to 2015.

The think tank said that demand is falling in South Korea, and that the end of tax cuts on automobiles further weigh down the market. It also projected that the government subsidy on scrapping outdated diesel cars will have limited effect. The institute estimates that the diesel car subsidy will lead to a net increase of 30,000 units.

Regarding exports, the think tank said that the global automotive market will show slow growth, and record 2.2 percent on-year growth in the second half. The European market’s growth will drop to 0.7 percent in the second half, while the US market’s annual growth will come in at 1.3 percent, the lowest in seven years, the think tank said.

By Choi He-suk (cheesuk@heraldcorp.com)