March 10, Seoul Due to a decline in output during an economic recession, South Korea’s domestic vehicle production fell one spot from the previous year, placing it seventh in the globe, according to an industry organization on Monday.

According to a research published by the Korea Automobile & Mobility Association (KAMA), as local demand slowed, the nation’s domestic auto manufacturing decreased from 4.24 million units in 2024 to 4.13 million units in 2024.

According to the KAMA research, Yonhap news agency says that in 2024, high interest rates and inflation negatively impacted consumer confidence, which in turn caused a decline in domestic car sales.

“A combination of sluggish domestic demand and possible U.S. tariffs on vehicle shipments to the United States will likely continue to weigh on local production,” a spokesperson for KAMA said.

In order to lessen the effect of falling production on allied businesses, he urged the government to provide automakers further tax breaks for local manufacturing of next-generation cars and facility expansions.

According to the survey, last year’s top four auto-making nations were China, the US, Japan, and India, with 31.28 million, 10.56 million, 8.23 million, and 6.01 million units, respectively.

Last year, global vehicle manufacturing dropped 0.5 percent to 93.95 million units, the first year-over-year loss since 2020, when the COVID-19 pandemic caused the equivalent statistic to plummet 15.4 percent.

According to an industry estimate last year, the extended economic crisis and weak demand would probably result in lower domestic sales and output for South Korea’s car sector this year.

The Korea Automobile Manufacturers Association (KAMA) predicted that domestic auto sales and the nation’s total vehicle manufacturing would reach 1.7 million and 4.22 million units, respectively, in 2024.

The numbers show declines of 2.8 percent and 0.6 percent, respectively, over the previous year.

Due to rising interest rates and a decline in disposable income, KAMA predicted that domestic sales would decline. Demand is also anticipated to be impacted by a drop in incentives for electric vehicles.