Hyundai Glovis Acquires Car Auction 'Greater Erie Auto Auction'
Second Achievement in China Market After 3 Years
Expanding to 6 Auction Sites in the US by 2025
Focusing on a Market Twice the Size of New Cars
Expecting Synergy with New Car Sales
[Asia Economy Reporter Choi Dae-yeol] Hyundai Glovis has entered the used car market in the United States. After entering China in 2019 through a joint venture with a local company, this marks the second overseas expansion of its used car business. The U.S. used car market is more than twice the size of the new car market, and Hyundai Glovis plans to expand its business not only in wholesale and retail through the local used car business but also to exports to neighboring countries. The used car business is a representative upstream industry of finished car manufacturing, and this move is interpreted as Hyundai Motor Group’s more active localization strategy.
Glovis Establishes Used Car Auction Hub in the U.S. East Coast
On the 4th, Hyundai Glovis announced that it had acquired all shares of Greater Erie Auto Auction (GEAA), a used car auction operator in the U.S. The company is a leading local business in Pennsylvania, operating a 200,000㎡ auction site with five auction lanes since 2003. The annual auction volume is about 20,000 vehicles, and there are approximately 4,000 registered member dealers.
The local business will start mainly as wholesale centered on dealers, similar to the domestic market, and plans to expand the target to general consumers in the future. The company has been operating a used car auction business in Korea since 2001. In China, it entered the market in 2019 by establishing a joint venture with local automobile sales and logistics company Changjiu Group.
The Pennsylvania location of the acquired U.S. company is known as an area with a developed automobile industry due to its proximity to regions with high vehicle transactions such as New York and Ohio. Leveraging geographical advantages, convenience, and low fees, the company plans to expand its business to new regions. It also plans to transform the existing offline-centered used car auction into an online auction incorporating advanced IT technology.
A company official said, "We will gradually introduce digital technologies such as multi-channel network auctions and augmented reality, which are currently operated domestically. We plan to expand the business step-by-step to secure six auction sites in major U.S. cities by 2025 and increase annual sales to around 300 billion KRW after 2025 through wholesale, retail, and export businesses linked to the auctions."
"Synergy with New Cars" Expanding Business Domestically and Internationally
The primary reason Hyundai Glovis is entering the used car business in the U.S. is the enormous market size. According to KOTRA and others, while annual new car sales in the U.S. are around 17 to 18 million units, used car sales exceed 40 million units, making the market 2 to 3 times larger. There are also forecasts that the used car market will grow further due to disruptions in new car production caused by parts supply shortages amid COVID-19.
In particular, the auction method, which Hyundai Glovis excels at, is also considered a major distribution channel in the U.S. According to market research firm Cox Automotive, 40% of all used car transactions in 2020 were conducted through auctions. In Korea, this proportion is around 10%. A company official said, "We expect business synergy through the combination of GEAA’s local know-how, Glovis’s global logistics and distribution network, and professional auction operation capabilities."
The potential for synergy between the used car business and new car manufacturing and sales is another driving factor. The company can leverage after-sales service capabilities such as vehicle maintenance and expects a lock-in effect where existing customers consistently consume one brand. The ability to accumulate usage information throughout the vehicle lifecycle, from sales to consumption, is also a factor attracting finished car manufacturers. In Korea, used car retail sales have been classified as a small and medium-sized enterprise suitable industry, preventing Hyundai Motor and Kia from engaging in it, but with the lifting of this designation, they plan to expand the business actively from the end of this year.
This aligns with Hyundai Motor and Kia’s aggressive localization strategy in the U.S., where they are expanding their business. Hyundai Motor and Kia sell more than 1.2 million new cars annually in the U.S., making it their largest single market.
Hyundai Glovis plans to expand its used car business beyond the U.S. and China to other overseas regions such as Europe and Asia-Pacific. The company aims to broaden the business in various ways, including wholesale and retail as well as platform businesses. A company official said, "Starting with this acquisition, we plan to accelerate global market expansion, including various states in the U.S."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
