"Saving leads to a better life." "Small car, big joy." These were the advertising slogans for the Tico, Korea's first-ever subcompact car, launched by Daewoo Motor in 1991. The Tico took the market by storm thanks to its price tag in the 3 million won range — about 2 million won cheaper than small cars — and its outstanding fuel efficiency, at a time when the aftershocks of the Gulf War sent international oil prices soaring. Government pledges, including a registration tax cut and a 50% discount on highway tolls, also fueled buying appetite. The Tico sold 30,000 units in its first year alone, establishing itself as the nation's car.
Thirty-five years on, subcompact cars are enjoying a renewed surge in popularity as the triple wave of high prices, high exchange rates and high interest rates batters consumers. From January through April this year, 28,417 subcompact cars were registered in Korea, up 12.8% from a year earlier. In particular, sales of Kia's Morning, which is priced in the 13 million won range and boasts the best fuel efficiency among subcompact cars, surged 59.9% over the same period.
Cheap-yet-satisfying "frugal spending" has become the new normal in the era of three highs. Among practical-minded consumers, "self weddings" — in which couples skip the so-called "SDM" package (studio, dress and makeup) costing several million won and instead rent dresses and prepare ceremonies on their own — are spreading. The "Geoji Map" (Beggar Map) app, which shares cheap and tasty restaurants, is also drawing strong interest. Consumers in their 20s and 30s, drawn to retro sensibility and value, are flocking to traditional markets such as Dongmyo Market for date courses.
On the other hand, K-shaped polarization in consumption is deepening. Department stores and the luxury market are booming, packed with VVIPs (very, very important persons) and the "young and rich." Even in the early 1990s, when Ticos roamed the streets, there was a contrasting scene at Apgujeong Rodeo Street, the stronghold of the so-called "Orange Tribe" of free-spending youth — but the polarization felt today, unlike during that era of rapid growth, is of a different temperature.
Amid a compound crisis combining low growth and the three highs, ordinary households will continue to tighten their belts. Frugal spending is both a survival strategy for ordinary people enduring high prices and a self-portrait of an increasingly strained life. The government must run the economy with price stability as its top priority. Unless the vicious cycle of sluggish domestic demand and K-shaped polarization is broken, escaping the swamp of low growth will be difficult.
