Sales of imported cars from luxury brands such as Mercedes-Benz, Porsche, and Bentley have plummeted in South Korea during the first two months of 2024, coinciding with the government's implementation of lime green license plates for corporate-owned luxury vehicles worth over 80 million won ($61,500).

The Korea Automobile Importers & Distributors Association reported a 19.4 percent year-on-year drop in total imported vehicle sales in January this year to 13,083 units, marking the lowest sales figure since 2013. About 1 in 3 imported cars sold in Korea last year was priced above 100 million won.

Effective January of this year, the Korean government mandates lime green license plates for corporate-owned vehicles priced above 80 million won to make them easily distinguishable from privately owned vehicles with white plates to discourage the misuse of tax cuts.

Local companies have been able to take advantage of tax cuts, worth up to 8 million won ($6,000) per year, for vehicles purchased or leased for business purposes. This benefit, however, was frequently exploited, as the law did not cap the total deductible amount over time, allowing for the entire purchase price of luxury vehicles to be written off under corporate expenses.

This loophole was also cited as a key factor driving up luxury car sales and the imported car market overall for years.

Following the new scheme taking effect, corporate purchases of imported cars plummeted to 4,876 units in January alone -- a sharp decrease of over 60 percent from 12,670 in December and about 52 percent lower than in November.

Ultra-luxury brands with cars costing over 100 million won have been especially hard hit. Bentley, for instance, sold just 11 units in Korea last month, representing an 82 percent decrease compared to the same month last year, with sales in January also dipping to 13 units. This downturn stands out as the company set three consecutive annual sales records in Korea with monthly sales typically ranging between 60 to 90 vehicles.

Mercedes-Benz also saw a dramatic fall in the sales of its most premium Maybach model, which is priced above 290 million won, with its sales plummeting to 55 units in January from an average monthly sales volume of 216 units last year.

Representatives from luxury car brands remain cautious about attributing the decline solely to the new regulation, pinpointing logistical challenges.

"The lime-green plate's impact on our sales is undeniable, but it's not the whole story. The shipping crisis caused by Houthi rebel attacks in the Red Sea, disrupting Suez Canal routes, is a major headache for our deliveries from Europe to Asia," said a Mercedes-Benz Korea official.

"Pointing fingers solely at the new plate for our sales dip oversimplifies things. The gap between ordering and receiving our new Continental GT models released last summer, which can stretch from six months to over a year, also plays a big role," explained a spokesperson for Bentley Motors Korea.