Used Car Industry "Entry of Large Corporations Is Like Throwing Eggs at a Rock... Requesting a 3-Year Grace Period"

National Automobile Dealers Association Press Conference on the 29th
Refuting Claims of Completed Vehicle Industry... Expressing Opposition to Market Entry
"Preparing to Establish a System to Crack Down on False and Bait Listings"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The used car industry argues that if Hyundai and Kia enter the used car market, it will only create a monopolistic market and will not solve the problems of false and bait listings. They have requested a minimum grace period of three years until a system is established to improve the used car market and enhance consumer welfare.

The National Federation of Automobile Dealers Associations held a press conference on the 29th at the Korea Federation of SMEs in Yeouido, Seoul, opposing Hyundai and Kia's entry into the car sales business.

Chairman Jang Nam-hae of the federation stated, "The social costs incurred due to the destruction of the automotive industry ecosystem will outweigh any positive effects gained from large corporations entering the market," and refuted the claims made by the finished car manufacturers point by point.

"Only selling good cars directly"... Concerns over price increases

Regarding the finished car manufacturers' claim about certified used cars (vehicles within 5 years or 100,000 km), he pointed out, "They are treating vehicles still under the new car AS warranty period as if they are providing free AS and certification, which should actually be covered by the new car AS warranty."

He continued, "They plan to collect 100% of used cars, directly sell good used cars with remaining new car AS warranty, and wholesale auction the used cars likely to cause complaints to the existing industry," expressing concerns about used car price increases.

Cho Byung-kyu, head of the Jeonnam Automobile Dealers Association, also criticized, "Finished car manufacturers can offer discounts on new cars on the condition of purchasing existing cars," adding, "The core of the used car market is collection. Hyundai and Kia plan to collect 100% of all used cars and directly sell only good cars with AS warranty to consumers."

[Image source=Yonhap News]

Currently, the issue of finished car manufacturers entering the used car sales business is undergoing a voluntary adjustment process between large and small-medium enterprises and will proceed to the business adjustment review committee. Earlier, the Ministry of SMEs and Startups recommended a temporary suspension of business commencement to Hyundai and Kia, who are leading the entry into the used car market, in January. According to related laws, the Minister of SMEs and Startups can set a recommendation period within three years.

Chairman Cho said, "The core of the business adjustment review committee is a three-year business suspension," adding, "There needs to be time to create a system to monitor false and bait listings and to compile listings for three years before large corporations enter the market."

"Strengthen crackdown on false and bait listings... Establish monitoring system"

Chairman Jang stated regarding the false and bait listing issue, "Finished car manufacturers say that if they enter the used car market, false and bait listings will disappear, but except for a very small number of operators, most people who commit fraud with used cars are unrelated to the used car market."

He defined false and bait listings as "the acts of some criminal groups" and emphasized that the problem can be solved through government monitoring and strong crackdowns. He also argued, "It is wrong for finished car manufacturers, who have no investigative or judicial authority, to claim that illegal activities will disappear once they enter the used car market."

Furthermore, with Hyundai and Kia's market share in the domestic finished car market increasing from 75% in 2020 to 88% last year, if they also add used car sales, used car exports, and scrapping businesses, a huge monopolistic giant will be formed, he predicted.

The used car industry said they are developing services such as real-time listing information, price inquiry, and vehicle history checks for consumers, as well as a service to verify false and bait listings in real time, along with used car platforms like Heydealer.

Chairman Jang said, "What we consider most important is self-reflection," adding, "We are preparing a system that provides accurate information related to consumer welfare and corrects wrong practices, moving away from improper transaction customs."

In addition, they are preparing ▲ certified used car products ▲ a federation-operated integrated complaint call center ▲ and a certification system for employee ID cards.

Choi Yuk-sik, head of the Daegu Automobile Dealers Association, expressed concern, saying, "Competing with Hyundai and Kia is like an egg hitting a rock," and "Just as franchise bakeries monopolized and local bakeries closed, 5,000 dealers will lose their jobs and used car prices will rise."