South Korea's government offered a tax break yesterday to motorists who replace ageing cars with newer models, in bid to boost sagging demand in the auto industry. The strategy and finance ministry said the measure, worth up to 2.5 million won (US$1,900), would be available to drivers who trade in a car that is more than nine years old. The incentive, which will run from May to December, was announced as local auto makers feel the bite of the global economic downturn.South Korean car manufacturers, including Hyundai Motor, have reduced their output due to slumping sales while Ssangyong Motor, the smallest automaker in the country, is under court receivership to avoid bankruptcy.
South Korea's five automakers sold a total 402,563 vehicles in March, down 18.7 percent from a year earlier, with Hyundai's sales falling 9.8 percent to 233,443 units.
The tax break will come from reducing purchasing and registration taxes by 70 percent, officials said. They estimated it could potentially affect 548,000 vehicles - 32.6 percent of the total 16.8 million registered in the country.
The government is also considering providing more liquidity to auto finance companies as part of efforts to stimulate demand.
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