Used Car Platform AutoBell Visitor Survey
Higher Price Merit Compared to New Cars
Immediate Purchase Possible Amid Supply Shortage
[Asia Economy Reporter Choi Dae-yeol] Masang-sik (29, pseudonym), an office worker living in Yeouido, Seoul, is about to sign a contract for a used car as his first-ever vehicle. Every weekend, he has been visiting used car complexes in Incheon and Suwon, carefully searching online and via mobile, narrowing down candidates including the Grandeur. Masang-sik said, "There used to be a strong negative perception of used cars due to false listings, but it seems more trustworthy compared to the past," adding, "Having a loan means I don't have the capacity to spend a large amount of money additionally, which also influenced my decision."
A survey revealed that about two out of three consumers prefer used cars over new cars for their first purchase. This is attributed to the increase in consumers who perceive that chronic issues in the domestic used car market, known as a typical lemon market due to significant information asymmetry between sellers and buyers, will improve following the allowance of large corporations entering the market.
As Hyundai Motor Company and Kia, the largest domestic automakers, are actively preparing certified used car businesses utilizing vehicle management know-how and maintenance infrastructure, there is a forecast that the market size will rapidly expand like overseas markets once trust in the market is restored.
On the 6th, a survey conducted by Autovel, a used car trading platform operated by Hyundai Glovis, targeting 1,148 visitors, showed that 64% chose a used car as their first vehicle. About half (53%) preferred used cars over new ones due to the burden of being inexperienced in driving. Thirty-five percent cited the ability to purchase within their planned vehicle budget, highlighting the price advantage compared to new cars.
Since the COVID-19 pandemic, the severe shortage of vehicle semiconductors and parts supply has led to extended waiting periods after vehicle contracts, causing 12% of respondents to choose used cars available for immediate purchase. In reality, some new car models require waiting over a year after ordering, and this demand bottleneck remains unresolved.
Regarding methods of purchasing used cars, 42% answered that they buy by visiting used car complexes directly, the highest proportion. The response for using online platforms was similarly high at 39%. Although traditionally, due to the high value of vehicles, inspecting and selecting in person was the norm, the spread of e-commerce consumption trends has extended into the used car market.
This is the result of expanding vehicle inspection items and the application scope of advanced IT technologies, along with various promotional activities such as delivery services and refund policies. Hyundai and Kia are also focusing on mobile channels like applications (apps) in preparing their used car businesses.
The biggest deterrent to purchasing used cars was false listings or discrepancies from the provided information, cited by 58%. False or bait listings are chronic problems in the domestic used car market. According to the Korea Consumer Agency's statistics on consumer damage types related to used cars, 80% involved differences between performance inspection details and the actual vehicle condition.
There have been ongoing criticisms that the lack of trust in the used car market limits its growth. The domestic used car market is about 1.4 times the size of the new car market (as of 2019), which is relatively small compared to major advanced automotive countries like the U.S. (2.4 times) and Germany (2 times), both in absolute and relative terms. Hyundai Glovis operates a "one-strike-out" policy on false listings on its platform Autovel, permanently banning members caught even once selling false listings, recognizing the importance of enhancing market trust.
A company official said, "Negative experiences during the first used car transaction can lead to a negative perception of the used car market," adding, "We will provide positive experiences to consumers to further activate the used car market."
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