Used Car Market, Will It Be Released to Automakers... Final Decision After Tomorrow's 'Endgame Debate'

The Deliberation Committee on Suitable Industries for Livelihood to Meet on the 17th at 10 AM
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[Image source=Yonhap News]

The decision on whether large corporations will enter the used car market, which has been unresolved for three years, is expected to be made tomorrow (the 17th).

According to the Ministry of SMEs and Startups, a committee meeting on the designation of the used car sales business as a livelihood-type suitable industry will be held at 10 a.m. on the 17th at the Ministry's building in Sejong City. The committee, composed of 15 private members, will discuss the issue of finished car manufacturers entering the used car business in a closed session. A Ministry official stated, "The private members have expressed their determination to reach a conclusion on this day," adding, "It is expected that a thorough debate will continue until late afternoon."

Previously, the used car sales business was designated as a small business suitable industry restricting large corporations' entry in 2013, and the protection period expired in February 2019. In November of that year, the used car industry requested designation as a livelihood-type suitable industry, and the Ministry of SMEs and Startups was supposed to decide by May 2020 but has postponed the decision until now.

Finished car manufacturers have consistently sought to enter the used car market. On the 7th, Hyundai Motor officially announced its entry into the used car market, and domestic finished car manufacturers such as Kia, Korea GM, Renault Samsung, and Ssangyong Motor have begun preparations to participate in the used car business.

In this regard, a consumer group survey revealed that 6 out of 10 consumers are positive about large corporations entering the used car market. According to a survey conducted by the Korea Consumer Federation in December last year targeting 1,000 consumers with used car purchasing experience, 66.0% responded positively to large corporations entering the used car market. Information asymmetry between used car sellers and buyers, as well as issues with false and bait listings, have long been pointed out as chronic problems in the used car market.

The existing used car industry is concerned about monopolization by large corporations. A representative from the National Federation of Automobile Sales Business Associations said, "It is excessive for large corporations, which have monopolized new car manufacturing and sales, to enter the used car market as well," adding, "They will dominate the market by purchasing existing cars when selling new cars to customers." He continued, "There are concerns about used car price increases due to monopolization by large corporations in the used car market," and predicted, "The 65,000 automobile dealers nationwide will also lose their jobs."

However, even if the committee decides that the used car sales business is not a livelihood-type suitable industry, finished car manufacturers will not be able to start their business immediately. This is because the Ministry of SMEs and Startups issued a recommendation earlier this year to Hyundai and Kia to temporarily suspend the start of their used car sales business. A Ministry official said, "If the business is started, it will be considered a failure to comply with the recommendation and an order to comply will be issued, and if violated, a fine of up to 100 million won will be imposed."