Launch of Extended Warranty Service for Used Cars by Automobile Sales Cooperative
On the 11th, the Ministry of Land, Infrastructure and Transport announced that starting from the 12th, it will launch a product that allows consumers to use used car warranty services for one more year at a cost reduced by more than 50%.
The used car warranty service guarantees the contents of the used car performance record when consumers purchase a used car. If the actual vehicle condition differs from the record, compensation for damages is provided. Since June 2019, the Ministry has mandated subscription to this liability insurance. The insurance expires either 30 days after subscription or when the vehicle has been driven 2,000 km.
In February, the Ministry launched a product through the Automobile Sales Cooperative that provides additional warranty coverage for up to one year on 112 major parts such as the engine and transmission after the liability insurance period expires. This cooperative was established with the approval of the Minister of Land, Infrastructure and Transport under the "Automobile Management Act" to provide various guarantees, financial loans necessary for automobile sales business operations, and compensation related to automobile sales damages.
According to the Ministry, additional warranty for premium models of domestic and imported cars is available for up to one year. The coverage period for standard models of domestic and imported cars is 180 days.
This extended warranty product is offered at a lower price than general insurance company products. For example, the subscription fee for an insurance company’s extended warranty product for a 'Sonata 2.0' with a vehicle age of 10 years or less, cumulative mileage of 150,000 km or less, and coverage period of 180 days/10,000 km is about 300,000 KRW. In contrast, the subscription fee for the Automobile Sales Cooperative’s product is only 69,500 KRW.
The newly launched extended warranty product can be subscribed to by automobile dealers with a one-time payment of the subscription fee. Only vehicles without issues such as registration, flood history, or liability insurance subscription can be enrolled. Consumers who purchase vehicles enrolled in the product receive repair cost coverage up to 10 million KRW for a total of 112 coverage items for 6 months or 1 year. Additionally, the cooperative operates a dedicated customer center for the extended warranty service in partnership with private insurance companies.
The used car extended warranty product launched by the Automobile Sales Cooperative can be subscribed to on the cooperative’s website.
Jeon Hyung-pil, Director of the Mobility Automobile Bureau at the Ministry, said, "The used car extended warranty service reduces anxiety for used car buyers and is a win-win model that enhances the competitiveness of small businesses. We look forward to active participation from the industry so that the used car market can develop into a safe and reliable market."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
