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No. of gas stations in Korea declines due to tough competition

Sampoong Gas Station, where the government set up a disaster countermeasure center after the collapse of Sampoong Department Store in 1995 in Seoul`s Banpo-dong neighborhood, once topped overall sales in the nation.

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It was the first in Korea to use attendants who pump gas on roller blades and introduce gifts such as kimchi or bottled water to regular customers based on the amount of purchase. The famed gas station was often packed with cars just like the department store across the street when staging a bargain sale. In June last year, however, the station was transformed into a meat restaurant due to low margin from gas sales.

 

Cheonggiwa Gas Station near Hongdae subway station, the first modern gas station in Korea, also went out of business. A high-rise building will be built at the site.

 

Owners of gas stations were once considered rich but this is no longer true. The number of gas stations going out of business is surging due to intensifying competition.

 

According to the Korea Oil Station Association on Friday, 174 gas stations closed through July this year, 40 percent more than the 124 that went belly up over the same period last year. The number of gas stations that closed gradually increased from 101 in 2008 to 109 in 2009 and further to 127 in 2010. The figure surged to 205 last year, however. About 10 to 30 gas stations are applying for liquidation every month this year. The industry predicts the number of gas stations to close will top 300 by year`s end.

 

More filling stations are going out of business because of plunging profitability plunge amid increasingly intensifying competition. They have been dealt a hard blow by the chain Alttl (Saving) Gas Station, which the government introduced nationwide to help stabilize gas prices, and NongHyup (National Agriculture Cooperatives Federation)s entry into the sector.

 

With more gas stations going out of business due to financial trouble, the overall number has fallen in the country. The number of gas stations continued to increase from 12,139 in 2007, 12,498 in 2008, 12,862 in 2009, and 13,003 in 2010. But those that went out of business outnumbered newly registered ones for the first time last year, with the number of operating gas stations declining to 12,901. The number has continued to fall this year to 12,892 as of late July.

 

A gas station owner in the Suji district of Yongin, Gyeonggi Province, said, The average profit ratio relative to sales has been less than 4 percent in recent months, adding, We make virtually no profit after extracting various expenses including personnel costs and credit card settlement fees.

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