South Korea: Automobile Market Projection for 2026

The South Korean automobile market is expected to recover to 1.73 million units in 2025, a 6.0% increase from the previous year. In the first half of the year, political instability surrounding former President Yoon Suk-yeol’s martial law declaration spilled over into the economy, causing real GDP growth to stall at 0.0% in the first quarter. However, real GDP growth has seen a sharp recovery since the second quarter, driven by a rebound in domestic demand following the new Lee Jae-myung administration’s economic measures and an increase in exports fueled by the global expansion of AI-related demand. Furthermore, demand recovery is being supported by the reduction of the individual consumption tax on passenger cars from 5% to 3.5%—an economic measure in effect until the end of 2025—alongside a surging stock market index.