A worker cycles past cars made by South Korea’s automakers Hyundai Motor and affiliate Kia Motors parked at the company’s shipping yard at a port in Pyeongtaek, about 70 kilometers south of Seoul in this Jan. 20, 2014 file photo. (Reuters Photo/Kim Hong-ji)
South Koreans Look to Save Fuel Even as Oil Price Tumbles
BY :MEEYOUNG CHO & HYUNJOO JIN
APRIL 02, 2015
Seoul. South Korean drivers are ignoring a 25 percent fall in petrol prices and still flocking to buy fuel efficient hybrid and diesel-powered cars, with many unhappy that retail prices haven’t fallen further.
Smartphone apps to find the cheapest fuel are also popular in a country where petrol prices can be up to 50 percent higher at some stations than others, and consumers blame refiners for dragging their feet on price cuts to boost profits.
Unlike the United States, where cheap oil has sparked a sharp rise in sales of big trucks and SUVs, Korean sales of hybrid-powered vehicles jumped 30 percent in the final quarter of 2014, two-and-a-half times the rise in the overall car market.
South Korean petrol prices are still twice those in the United States, and hybrid sales in 2014 accounted for more than 4 percent of the country’s total sales, a record high, IHS Automotive data showed, helped by aggressive discounts by Hyundai Motor ahead of new model launches.
“The hybrid version of the new (Hyundai) Sonata, which was launched late last year, is selling well despite less promotion. We expect hybrid car sales to remain strong going forwards,” said Kim Sang-dae, vice president at Hyundai Motor’s Domestic Marketing Group.
First-quarter figures are due out later this month, and analysts point to a new government subsidy for hybrid vehicle buyers that started this year that could help drive sales of fuel-efficient vehicles further.
“People have got fairly long memories and they have to be convinced for a while that oil prices would stay low and petrol prices stay low,” said Tim Armstrong, vice president at US-headquartered consultancy IHS Automotive.
Fuel-efficient diesel-engine vehicles are also popular in Korea, with sales jumping 21 percent in the fourth quarter. South Korea is the world’s eighth-biggest diesel car market and, with India, one of only two Asian countries in the top 10, according to auto part maker Bosch.
Local gasoline prices lost nearly a quarter to 1,510 Korean won ($1.37) a liter as of April 1 from early July. This compares with current US retail prices around $0.65 a litre.
Crude oil prices, however, slumped by more than 50 percent over the same period.
The public blames refiners for not passing on price cuts, while refiners point to government taxation, which they say accounts for more than 60 percent of the cost of fuel.
Koreans also face steeply varying consumer prices as some petrol stations own their land, whilst others have to pay rent, and because some operators bought supplies before prices started plunging in June last year.
Korea National Oil Corporation said usage of its app to find cheap petrol had doubled by early 2015 on a year earlier. But many motorists remain frustrated.
“I search for cheap gas stations. I tap apps,” said 45-year-old housewife Jung Na-mi. “But I don’t think gas stations reflect price moves immediately. I am not satisfied with them.”