Hyundai Kia Motors Declares Entry into Used Car Market... Tug of War over Win-Win Agreement

Key Issues in Discussions: Stockpiling, Handling Year Restrictions
Ministry of SMEs Proposes Hyundai-Kia Bear AS Costs for Used Car Industry
Hyundai Motor and Used Car Industry at Odds Over Win-Win Agreement Plan

[Asia Economy Reporter Suyeon Woo] As Hyundai Kia Motors officially announces its entry into the domestic used car market, industry attention is focused on whether Hyundai Kia Motors and the used car sales industry can find a mutually beneficial compromise. While the Ministry of SMEs and Startups, Hyundai Kia Motors, and the used car sales industry are coordinating a 'win-win agreement' by keeping the possibility of large corporations entering open, a tense tug-of-war among the three parties continues.

According to the industry on the 19th, in July, the Ministry of SMEs and Startups held an unofficial meeting inviting Hyundai Kia Motors and representatives from the two major domestic used car sales associations, but the meeting ended without agreement, only confirming their differences in position. Hyundai Kia Motors expressed its intention to actively pursue entry into the used car market if the Ministry excludes the used car sector from the livelihood-type suitable industry designation, while the used car sales industry demanded the re-designation of the livelihood-type suitable industry, arguing that small-scale businesses need time to build competitiveness.

Used cars lined up in a domestic used car trading complex, ready for sale.
Photo by Asia Economy

The Ministry of SMEs and Startups seems to be leaning toward allowing large corporations to enter from the perspective of consumer welfare and strengthening industrial competitiveness. However, the Ministry intends to prepare a win-win agreement that allows large corporations and small businesses to coexist, providing a kind of guideline to protect small businesses.

However, the sharply divergent positions of both sides have hindered even the preparation of the win-win agreement. Hyundai Kia Motors submitted a first draft of the agreement to the Ministry of SMEs and Startups, including provisions such as providing an open platform and limiting the model years of vehicles handled. The Ministry, however, deemed the draft insufficient and requested further revisions.

The most pressing issues are the accumulation of used car inventory and the limitation on the model years of vehicles handled by large corporations. Used car accumulation mainly occurs alongside new car purchases, as many people typically put their used cars on the market when buying new cars.

The used car industry is concerned that Hyundai Kia Motors, which sells new cars, will monopolize used car accumulation, making it difficult to secure inventory. On the other hand, Hyundai Kia Motors states that if the vehicles fall outside the business scope set by the win-win agreement, it can separately provide accumulated used car inventory to small-scale merchants.

Therefore, setting the model year limit for used cars that large corporations can handle is expected to be the key point of this agreement. According to Assemblywoman Sujin Lee of the Democratic Party, used cars aged 1 to 5 years accounted for 52.8% of used car sales last year. If large corporations handle vehicles under 5 years old, as is the case overseas, they could control more than 50% of the entire market.

It is also noteworthy whether Hyundai Kia Motors will accept the Ministry of SMEs and Startups' proposal to share after-sales service (AS) costs of the used car industry. If the costs for coexistence exceed the profits earned from the new business, Hyundai Kia Motors' entry into the used car market is expected to be difficult. We hope that through detailed coordination of the win-win agreement, the used car market will soon become a transparent and highly trustworthy market.

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