SK rent-a-car adds 4,200 electric vehicles to its fleet in 2021
Rental firms expected to absorb more than 8% of total green vehicle sales by 2025
Refiners expect gasoline demand to continue falling but exports seen stable
Rental car companies are expected to play a big part in the South Korean automobile transport sector’s fuel switch from gasoline and diesel to greener energy, with SK rent-a-car and Lotte Rental absorbing a significant portion of the country’s annual electric vehicle sales, industry and market participants said Dec 10.
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Lotte Rental bought 8,000 electric vehicles in 2020, which accounted around 4% of South Korea’s total electric vehicle sales for the year, a company official said. The country’s biggest rental car firm by fleet is expected to have added around 10,000 electric and hydrogen-fueled vehicles in 2021.
South Korea’s second biggest auto rental firm SK rent-a-car said it bought around 4,200 electric vehicles in 2021 and plans to absorb a much bigger portion of the country’s total green vehicle sales over the coming years.
SK rent-a-car has issued “green corporate bonds” for the first time early this year in an effort to secure capital purely for investments in green and environmentally friendly vehicles, the company said in an ESG statement, and is rapidly increasing the share of green vehicles in its overall fleet.
The company also plans to set up a rental center for electric vehicles at its Jeju branch, which would be the country’s largest electric vehicle-themed venue.
South Korea’s major car rental firms combined are expected to lead the automobile transport sector’s fuel switch by purchasing more than 8% of the country’s total green vehicle sales by 2025, according to marketing sources at the major rental firms and market analysts surveyed by S&P Global Platts.
Long-term lease packages are very popular in big cities and the green vehicles managed by the major rental firms would provide many consumers with an affordable experience in electric and hydrogen-fueled cars, according to automobile sector analysts at Hanwha Investment & Securities and Kiwoom Securities based in Seoul.
South Korea’s gasoline and diesel demand will inevitably trend lower as the share of green vehicles is poised to surpass 10% of the total automobiles registered in the country within the next 3-5 years from current 4.2%, according to diesel marketing managers at three major South Korean refiners. The country has a total 2.436 million vehicles registered and active on the road, according to Ministry of Land, Infrastructure and Transport data.
The country’s second biggest refiner GS Caltex has been collaborating with Lotte Rental since the third quarter of 2020 to provide various next-generation charging services at its gas stations. GS Caltex operates some 40 charging stations with 46 rapid chargers.
South Korea consumed 206 million barrels of gasoline and diesel in the first 10 months of the year, up 3% from 200 million barrels in the same period a year earlier and down 1.9% from 210 million barrels over January-October 2019, latest data from state-run Korea National Oil Corp showed.
Although rising electric and hydrogen-fueled vehicle sales in Asia’s fourth biggest oil consumer will likely lead to a steady decline in domestic gasoline and diesel consumption over the next decade, major refiners including SK Innovation and S-Oil indicated that production of the automotive fuels may not necessarily drop sharply on expectations of stable exports, especially to Southeast Asia, middle distillate marketers at the refiners said.
“The speed of energy transition and fuel switch will take longer for less developed economies and average consumers in those markets would have less spending power for new green fuels,” a middle distillate marketer at S-Oil said. “South Korea will continue to be a reliable liquid motor fuel supplier for consumers across Southeast Asia for at least another decade.”