Entry into the Used Car Market by Large Corporations Blocked Again... Direct Entry into Sales Business Under Review

Failed Mutual Agreement on Used Car Trade Industry Development Council
Win-Win Growth Committee Also Deems Livelihood-Type Suitable Industries 'Unsuitable'
Controversy Over Ministry of SMEs' Negligence and Illegality

[Asia Economy reporters Kim Hyewon and Yoo Jehoon] Efforts to seek social consensus among stakeholders regarding large corporations' entry into the used car market have fallen through. This is because the completed car manufacturers and the used car industry failed to narrow their differences, effectively failing to produce a win-win agreement. The completed car industry is reportedly preparing a 'Plan B' involving direct entry into the used car sales business.

The Used Car Sales Industry Development Council, jointly formed by the Democratic Party's Euljiro Committee and the industry, held a press conference on the 31st and announced that only a broad agreement on 'gradual entry over four years' was reached, but final agreement was not achieved due to disagreements on key issues such as transaction volume and used car procurement methods. ▶Related article page 5

Both the completed car and used car industries agreed to allow completed car manufacturers to procure and sell used cars but limit sales to only 10% of the total volume. They also agreed that completed cars would only handle vehicles that are 5 years old or less and have less than 100,000 km mileage. However, during detailed negotiations, differences arose over the interpretation of the criteria for the volume that can be handled. The completed car industry intends to handle 250,000 units, which is 10% of the annual 2.5 million units including both business and private transactions, whereas the used car industry insists that only 130,000 units of business volume multiplied by 10%, i.e., 13,000 units, should be handled, leading to a failure in agreement. The used car industry's insistence on prohibiting completed car manufacturers from handling other brands was also a major cause of the negotiation breakdown. Additionally, the demand that the used car industry be granted new car sales rights equivalent to the number of used cars traded by completed car manufacturers became another obstacle to agreement.

The Development Council has left the possibility of further negotiations open, but the completed car industry's position is that it will be difficult to find a consensus if the used car industry continues to demand that completed car manufacturers be prohibited from procuring other brands and insist on new car sales rights. In this case, the five completed car companies are reportedly considering direct entry into the used car sales business according to each company's circumstances. The completed car industry has so far been able to enter the used car market at any time after registering as a business operator but has sought consensus in the spirit of coexistence.

The used car sales business lost its status as a small and medium-sized enterprise (SME) suitable industry in February 2019, when the restriction period expired, so there is no particular basis to block large corporations' new entry. Moreover, the Win-Win Growth Committee has submitted an opinion to the Ministry of SMEs and Startups stating that the used car sales business is unsuitable as a livelihood-type suitable industry. The Development Council, which was launched as a temporary organization for up to three months, failed to reach a conclusion on this day, and the issue will be passed to the Ministry of SMEs and Startups, the competent authority. The Ministry, which has delayed the statutory decision deadline (May 6, 2020) on large corporations' entry into the used car market by more than one year and three months, is also expected to face controversy over dereliction of duty and illegality.

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