Countdown to Large Corporations Entering the Used Car Market... "We Will Further Expand the Market Size"

Full-Scale Entry into Large Corporations from the First Half of Next Year
"Clear Quality Standards for Used Cars Expected"

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] As major automakers including Hyundai Motor Group, Korea GM, and Ssangyong Motor, along with large corporations, rush to enter the used car market, opinions within the related industry are divided. However, the automotive industry generally expects that the entry of large corporations into the used car market is more likely to have a positive impact on the market.

According to industry sources on the 27th, Hyundai Motor is preparing to open a certified used car exclusive high-tech center in Yangsan, Gyeongnam, targeting January next year. The existing Hyundai Motor Yangsan Delivery Center located in Habuk-myeon, Yangsan City, will be demolished, and a new building is scheduled to be constructed by the end of this month.

Hyundai Motor has already secured land in Anseong and is in the process of purchasing sites in Suwon and Incheon. Ssangyong Motor, Renault Korea Motors, and Korea GM are also discussing their own reviews for entering the certified used car market.

Companies other than automakers are also rushing to enter the used car market. Lotte Rental recently agreed on 'voluntary adjustment' with the used car industry (Korea Automobile Dealers Association Federation and National Automobile Dealers Association Federation) for business entry. This followed the used car industry's application for business adjustment to the Ministry of SMEs and Startups after Lotte Rental officially announced its entry into the used car market in June last year. The industry expects that Lotte Rental will complete the adjustment within this year. Once the adjustment is made, Lotte Rental can immediately enter the used car market.

Until now, used car sales have been consistently protected as a livelihood-suitable industry, but in April this year, the Ministry of SMEs and Startups' Livelihood-Suitable Industry Deliberation Committee decided to exclude used car sales from the livelihood-suitable industry category, opening the way for large corporations to enter.

The used car industry has mixed views on the entry of large corporations. In particular, individual businesses have strongly opposed the Ministry of SMEs and Startups' measures.

However, corporate-type used car companies welcome the entry of large corporations. The entry of large corporations is expected to revamp the previously negative image of the market. According to the Korea Consumer Agency, from 2018 to March last year, a total of 455 consumer damage relief cases related to used cars were reported. Among them, 'vehicle performance and condition defects' accounted for 45.5%, making product quality-related issues the most frequent. Other issues included 'service' problems at 30.1%, followed by 'insufficient disclosure of accident information and flood-damaged vehicles' and 'provision of differing information such as mileage and model.'

Furthermore, the entry of large corporations into the used car market is expected to establish standards for used car quality, which had been arbitrarily evaluated until now. A representative from a corporate-type used car company said, "If large corporations enter the used car market, more high-quality vehicles will come in, so the market will grow. From the seller's perspective, clear standards will be established, making the market more transparent."

Experts also view the entry of large corporations into the used car market positively. Professor Pilsoo Kim of the Future Automotive Department at Daelim University explained, "If large corporations enter, the reliability of the used car market itself will increase. Rather, the market size can grow, which will create opportunities for other companies as well."