Fair Trade Commission, Survey on Dealership Transactions
44% of New Car Sales Dealerships
"Forced Sales Targets by Automakers"
It was found that 4 to 5 out of 10 new car sales dealerships experienced unfair practices such as being forced to meet sales targets by automakers and receiving penalties if the targets were not met.
On the 18th, the Fair Trade Commission announced the results of the "2024 Written Survey on Dealership Transactions," which investigated the transaction status of 522 suppliers and 50,000 dealerships. This year, the survey was conducted across 20 industries including food and beverage, telecommunications, and home appliances, and also included the travel industry, which had not been surveyed previously due to difficulties caused by the COVID-19 pandemic.
According to the survey results, 44% of respondents from new car sales dealerships reported experiencing unfair practices such as being forced to meet sales targets and receiving penalties for failing to meet them. The proportion of dealerships experiencing forced sales targets was also high in industries such as boilers (21.2%) and fertilizers (18.9%).
The percentage of dealerships that reported experiencing disadvantages such as suppliers unilaterally changing transaction conditions unfairly or refusing returns was highest in automobile sales at 18.0%, followed by cosmetics (15.8%) and furniture (12.5%).
The proportion of dealerships that had been asked for information considered business secrets was highest in cosmetics (12.8%), followed by automobile sales (9.0%) and furniture (8.1%).
The sales proportion of dealership transactions among the surveyed suppliers was 47.2%, a decrease of 2.3 percentage points from the previous year (49.5%), but dealerships still accounted for the largest share of suppliers' distribution channels.
The percentage of dealerships that responded they were generally satisfied with transactions with suppliers was 89.4%, a decrease of 0.9 percentage points from the previous year (90.3%). The percentage of respondents who felt that unfair practices in dealership transactions had generally improved was 91.8%, down 1.0 percentage point from the previous year (92.8%).
The average startup cost invested by dealerships during the initial contract process with suppliers was 196.06 million KRW. Dealership contracts were most commonly made on a one-year basis at 64.2%. The proportion of contracts without a fixed term was also high at 17.4%. The duration of contract relationships with dealerships was 5 years or more in 70.7% of cases (with 45.8% lasting 10 years or more).
The proportion of dealerships that conducted store renovations during their business period was 12.3%, with the average cost of renovations being 50.73 million KRW. The average renovation cycle was 6.5 years, with 33.0% of renovations decided at the request of suppliers and 67.0% decided voluntarily.
The Fair Trade Commission stated, "We will maintain a monitoring system for violations of laws through continuous monitoring of major unfair trade practices by industry and major legal violation allegations by suppliers, and conduct ex officio investigations if necessary."
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