"Used Car Market Opening, Win-Win for Consumers, Dealers, Automakers, and Parts Companies... Prompt Resolution Needed"

KAIA 19th Automotive Industry Development Forum on "Is the Used Car Market Okay as It Is?"

Jeong Manki, Chairman of the Korea Industrial Federation Forum, is giving a greeting at the '9th Industrial Development Forum and 13th Automotive Industry Development Forum' held on the 25th at the Automobile Hall in Seocho-gu, Seoul. Photo by Moon Honam munonam@

As early as this year, the entry of large corporations into the used car sales industry is expected to become visible, and there are claims that the full opening of the used car market will be a 'win-win' for consumers, the complete car industry, as well as existing dealers and parts partners, among various stakeholders. Voices are growing louder to hasten market opening and establish a virtuous cycle in the used car ecosystem.

The Korea Automobile Industry Association (KAIA) held the 19th Automobile Industry Development Forum on the 8th under the theme "Is the Used Car Market Okay as It Is?" In his opening remarks, KAIA Chairman Jeong Manki stated, "Allowing complete car manufacturers to participate in the used car market can be a '4 win game' where consumers, existing dealers, parts companies, and complete car manufacturers all benefit." He explained that advanced countries without exception do not regulate the participation of complete car manufacturers in the used car market because it creates positive effects such as expanding consumer welfare, increasing business opportunities for used car dealers, enhancing the competitiveness of complete car manufacturers, and expanding the market for parts companies.

As of last year, the domestic used car market reached about 2.515 million transactions, which is 1.3 times the new car market (about 1.905 million). Although the total industry size is a huge market worth 22 trillion won, government regulations have limited the participation of large corporations.

Experts attending the forum pointed out that the current used car market, where large corporations' participation is restricted, is causing the disadvantages to be directly passed on to consumers. Kwak Eun-kyung, Secretary General of Consumer Watch, said, "There are no competitive and trustworthy companies in the current used car market, resulting in consistently low quality and elastic pricing, with the damage passed on to consumers." She added, "Currently, imported complete car manufacturers trade used cars, but only domestic complete car manufacturers are restricted from entering the market, which means ordinary people using domestic cars are being discriminated against."

There was also an analysis that the participation of the complete car industry in the market could bring benefits to everyone. For consumers, it can improve transaction reliability; for dealers, it can expand new business opportunities through increased transaction volume; for the parts industry, it can expand the market due to increased demand for genuine parts; and for the complete car industry, it can secure competitiveness in new cars as a secondary effect.

Moon Seung, CEO of Daseong Co., Ltd. and Chairman of the Korea GM Cooperation Association, said, "Although parts demand may not increase enough to resolve the management difficulties of parts companies upon market opening, we expect the parts industry to enjoy considerable ripple effects through the expansion of genuine parts usage, increased new car sales, and added value from used car exports."

While the conclusion regarding the opening of the used car market is delayed, consumer damage caused by the distorted market structure continues to increase, prompting calls for a swift decision from related authorities such as the Ministry of SMEs and Startups. In fact, in May, an incident that sparked public outrage occurred when a consumer who suffered damage from false used car listings took an extreme step.

Lim Gi-sang, representative of the Automobile Citizens' Coalition, said, "Despite several calls and signature campaigns from civil society to open the market, the Ministry of SMEs and Startups has failed to reach a conclusion even after 1 year and 6 months from the legal deadline and 2 years and 9 months from the start of discussions," urging full opening within the year. Professor Kim Pil-su of Daelim University, who acted as a mediator with the Democratic Party's Euljiro Committee, also stated, "Six years have passed since the designation of small and medium-sized enterprises as suitable industries, and two years since the Fair Trade Commission's unsuitability ruling, yet this issue has been neglected, resulting in a sharp increase in consumer damage." He added, "A consumer-centered decision is most needed rather than maintaining vested interests. A prompt decision is necessary."