[Takryu Cheongron] Monopoly Concerns... Protecting the Livelihoods of Small Business Owners

Opening of the Used Car Market

A major completed car manufacturer is attempting to enter the used car sales market. Completed car manufacturers should conduct business with the right values, but they are now eyeing the used car sales market, which is primarily composed of small business owners. The entry of large corporations into the used car sales market could lead to the collapse of the current used car market. As a result, small business owners engaged in used car sales face a high risk of large-scale unemployment.

If completed car manufacturers enter the used car sales market, it is obvious that a monopoly dominated by a few large corporations will form. In the used car sales business, operators who secure a large number of high-quality vehicles inevitably gain a competitive advantage. Therefore, acquiring high-quality used cars is crucial. Large corporations hold a dominant market position in the new car manufacturing and sales market. They also directly manage and control nationwide sales and distribution networks, allowing them to leverage this superior position to secure a large number of high-quality vehicles.

Completed car manufacturers have already established a market dominance structure encompassing both new and used cars through subsidiaries involved in used car financing and used car auctions. On the other hand, small and medium-sized operators have very limited channels to supply used cars. If completed car manufacturers fully enter the used car sales market, small and medium-sized operators are likely to be driven out of the market within 1 to 2 years.

In particular, unfair trade practices may occur. Completed car manufacturers might strengthen their market position by disadvantaging consumers who purchase used cars from small and medium-sized operators when providing financial loans or by disadvantaging small and medium-sized operators when they purchase used cars through auctions. There is also a possibility that completed car manufacturers will set used car prices at a certain high level to defend their brand value. The resulting burden could ultimately harm consumers.

There are about 6,000 used car sales businesses nationwide. They are legally registered as automobile management businesses with their respective district offices, pay taxes, and operate their businesses. Due to the economic downturn caused by the novel coronavirus infection (COVID-19), the management burden on small business owners in the used car market is also increasing.

It is estimated that 300,000 employees and their families are engaged in used car sales businesses nationwide. The Korea Automobile Dealers Association will mobilize all its capabilities to strongly fight against the entry of completed car manufacturers into the used car sales market and to protect the industry's right to survive.

Last February, the association requested the Fair Trade Commission to recommend the used car sales business as a livelihood-type suitable industry for small business owners and applied for designation to the Ministry of SMEs and Startups to block the entry of completed car manufacturers into the used car sales market. However, even after one year and seven months, the application is still stalled at the review stage of the Ministry’s deliberation committee.

The used car sales business meets all the designation requirements set forth in the Special Act on the Designation of Livelihood-Type Suitable Industries for Small Business Owners. It should rightfully be designated as a livelihood-type suitable industry. Once designated, large corporations are, in principle, prohibited from newly entering or expanding existing businesses in the designated industry. Violations result in enforcement fines of up to 5% of the violating sales. Small business owners can receive policy support to build protection and self-sustainability during the designation period (5 years).

Regarding the entry of large corporations into the used car sales market, coexistence agreements are being mentioned through the Ministry of SMEs and Startups. They talk about coexistence without any coexistence plans. Coexistence agreements have no legal binding force. It is a ridiculous story.

Shin Dong-jae, President of the Korea Automobile Dealers Association

This content was produced with the assistance of AI translation services.