South Korea's commercial vehicle market stalls as construction slump, rising oil prices weigh

South Korea's commercial vehicle market is struggling to shake off a prolonged slump, squeezed by a deepening construction downturn and rising fuel costs and exchange rates.

Sales of imported commercial vehicles totaled 1,968 units in the first half of this year, down 8.7 percent from the same period last year, according to the Korea Automobile Importers and Distributors Association. The decline follows an already weak 2025, when full-year imported commercial vehicle sales fell 16.7 percent year-on-year to 3,925 units.

Domestic commercial vehicle makers fared no better in the first half. Hyundai Motor, the top seller in the segment, moved 52,157 commercial vehicles — a 16 percent drop from the first half of last year, according to Carisyou Data. Tata Daewoo also posted a decline, selling 1,593 units over the same period, down 7.1 percent.

Kia was the lone bright spot among major domestic players, lifted by strong demand for its purpose-built vehicle, the PV5, launched in June last year. Kia's commercial vehicle sales rose 61.2 percent year-on-year to 29,998 units, with the PV5 Cargo alone accounting for 11,942 of those. Its legacy models continued to lose ground, however — sales of the Bongo fell 8.3 percent and bus sales slipped 1.3 percent.

Industry officials point to the prolonged construction slump as the primary drag on commercial vehicle sales. Self-employed operators account for more than 95 percent of the domestic commercial vehicle market, meaning a vehicle shutdown directly threatens their livelihoods. As construction activity has contracted, many of these operators have seen their incomes fall and are deferring vehicle replacements, sharply reducing new demand.

Surging oil prices following the US-Iran conflict in the Middle East have added to the burden on vehicle owners, reinforcing a trend toward extending the life of existing trucks rather than buying new ones. Kim Tae-sung, chief executive of Tata Daewoo, said in April that if the Iran conflict ended within that month, it would affect industrial demand by about 3 percent, but if it dragged on until June, the impact could widen to 8 to 9 percent.

Imported commercial vehicle makers face a further squeeze from the weaker won. Because most of their vehicles are sourced overseas, a sustained depreciation of the Korean currency makes it increasingly difficult to stay price-competitive.

In response, commercial vehicle companies are rolling out low-interest financing and other incentives to ease the burden on customers. MAN Truck & Bus Korea is offering financial products with rates as low as 2.5 percent, along with a three-year free warranty extension on standard parts for select models. Star Truck Korea runs an installment program of up to 120 months to reduce upfront costs, and also supports long-term maintenance and parts replacement costs, emphasizing total cost of ownership savings.

"The won has weakened far more than we anticipated when we drew up our business plan for this year, and we are in intense discussions with our headquarters over pricing for the Korean market," an official at an imported commercial vehicle company said. "Sales are heavily influenced by price increases, promotions and discounts, and customers are becoming increasingly price-sensitive."