In the high-stakes world of luxury automobiles, a new player has emerged on the streets of Korea – the bright green license plate, introduced to combat tax evasion, which has sent shockwaves through the market, with sales of illustrious brands like Bentley, Porsche, and Rolls-Royce plummeting.
The Korean Ministry of Land, Infrastructure and Transport’s decision to make green plates mandatory for company cars over 80 million won ($57,800) was aimed at curbing the practice of registering supercars as business vehicles to dodge taxes. This move, effective from the onset of the year, has had a chilling effect on luxury car registrations. According to the Korea Times, Bentley’s sales have nosedived by a staggering 77 percent in the first quarter of 2024 compared to the previous year, while Rolls-Royce and Porsche have seen declines of 35 and 23 percent, respectively.
The green plates have become a scarlet letter for ostentatious wealth, deterring potential buyers who shun the public declaration that their prized possession is not personally owned. Moreover, the visibility of such plates makes it easier for tax authorities to spot misuse of company cars for private jaunts, closing loopholes that previously allowed business owners to register vehicles for relatives under the company’s name at a tax advantage.
The impact on luxury car market
The impact on the luxury car segment is undeniable. The Korea Times reports a significant shift in the composition of car registrations, with company-owned vehicles plummeting from 40 percent of total registrations last year to just 28 percent. This marks the first time they’ve dipped below the 30 percent threshold. Industry insiders attribute the decline to the negative perception of green-plated vehicles, often associated with rentals and leases, dampening the enthusiasm of business owners to invest in high-end fleet vehicles.
Despite the downturn, some industry executives suggest that broader economic factors are at play, with a sluggish economy naturally suppressing demand for expensive cars. Yet, the new regulation exacerbates the situation for luxury car makers, who are struggling to rev up sales in a market that was once buoyant.
Bentley, in particular, has felt the brunt of these changes. The British luxury car manufacturer, owned by the Volkswagen Group, reported an 11 percent decrease in global sales in 2023, with the Americas remaining its largest market despite a 9 percent drop. The brand’s sales performance was its third highest in history, bolstered by a 43 percent increase in personalization services. The Bentayga SUV continues to lead as Bentley’s top seller, with new variants like the long-wheelbase EWB Mulliner adding to its allure.
The luxury car market, however, is not uniformly bleak. Rivals such as Lamborghini and Porsche have reported healthy sales, with Lamborghini celebrating a historic milestone of over 10,000 vehicles sold. Porsche, too, enjoyed a 3 percent increase in deliveries, with record-breaking sales in the United States.
As the green plate rule reshapes the landscape of luxury car ownership in Korea, brands are adapting with intensified marketing efforts. Mercedes-Benz Maybach is set to open the world’s first brand center in Korea, while Bentley and Rolls-Royce are doubling down on customized programs to entice buyers. The market may be in flux, but the quest for exclusivity and prestige in the world of luxury automobiles endures, albeit with a new set of rules to navigate.
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