“As the global crude oil prices are set to bounce back, the eco-friendly vehicles are projected to gain more popularity in the coming months. The effect of state subsidy and tax benefits for buyers will further expand,” a ministry official said.
Korea saw the sales of hybrid cars in the nation come to 1,596 units in January, up 56 per cent from 1,023 units a year before.
Apart from the government subsidy of 1 million won ($900), hybrid car owners enjoy tax deductions of up to 3.1 million won, according to the ministry.
Hyundai Motor’s Sonata sedan topped the list with 1,420 units, followed by Toyota Motor’s Prius with 147, Lexus CT200h with 26 units. Policymakers forecast that yearly sales will reach about 30,000.
The government has set the subsidiaries budget for the eco-friendly cars at 30 billion won for 30,000 units for this year.
The targeted models are the Sonata 2.0GDI, Prius, Prius V, CT200h and Ford Motor’s Fusion Hybrid, all of which have an engine capacity of less than 2.0 liters.
The subsidy is not offered as an immediate discount when consumers buy the cars. It is provided to those who file applications with the Korea Environment Corp. after registering their vehicles.
The Environment Ministry had been pressured to scale back its spending on subsidies for eco-friendly hybrid vehicles by about 25 per cent from its earlier plan, which may lead to a backlash from consumers and automakers.
Though the ministry had planned to provide 40,000 retail buyers of hybrid cars with subsidies totaling 40 billion won in 2015, the National Assembly urged it to cut the total provision by 10 billion won to 30 billion won.