No Entry Regulations for Completed Vehicle Manufacturers, No Overseas Cases Found

New and Used Car Sales Channels Not Separated
Transaction Activation and Quality Development
Only Korea's Industrial Competitiveness Declines

[Asia Economy Reporter Ki-min Lee] Regulations restricting domestic automakers from entering the used car sales business are a unique situation found only in South Korea, with few examples overseas. While countries like the United States, Europe, and Japan have seen their used car markets grow alongside active used car transactions, South Korea's used car industry competitiveness is lagging behind.

According to the Korea Automobile Manufacturers Association on the 31st, the United States recorded 40.81 million used car transactions last year, which is 2.4 times the number of new cars sold (17.06 million). Germany's used car market size is also about twice that of new cars, with 7.19 million used cars compared to 3.6 million new cars. In contrast, South Korea's used car sales (2.24 million) were only 1.2 times the new car sales (1.78 million).

Major automaker-producing countries such as the United States, Japan, and Germany do not mandate the separation of sales channels for new and used cars. Consequently, global automakers trade both new and certified used cars through the same sales channels domestically and overseas. South Korea is the only country that stipulates that only used car dealers can exclusively operate used car retail businesses. This is considered a factor hindering the expansion of the domestic used car industry. Since vehicle safety and convenience are critical for drivers, the United States allows large capital capable of ensuring these aspects to operate used car businesses. Europe also encourages large companies, including automakers, to enter the used car sales business by applying the Block Exemption Regulation (BER) to competition law.

Additionally, in major countries, not only automakers but also dealers possess their own after-sales service (AS) capabilities, resulting in high consumer trust in used cars. In the United States, used car dealers handle different products based on factors such as model year, mileage, quality, reconditioning level, and service, allowing consumers to choose sales channels that match their purchasing power and preferences.

In Germany, vehicles are thoroughly evaluated through vehicle assessment, inspection, and certification organizations such as TUV S?d and DEKRA, as well as residual value appraisal companies. Moreover, companies are expanding the scope of the used car industry by applying IT solutions and subscription services, including digital vehicle inspections using digital twin technology and artificial intelligence (AI), and used car inventory management. An industry insider stated, "We should allow market entry of automakers and others who can contribute to the qualitative development of the used car market, like in the United States and Europe," emphasizing, "We need to create a fair competitive environment to promote new businesses and revitalize new industries based on used cars, thereby fostering the development and expansion of the used car market."

There is also a growing call for full market liberalization to secure overseas export opportunities by accumulating know-how in automakers' entry into the used car sales business. Chung Man-ki, chairman of the Korea Automobile Manufacturers Association, said, "If automakers can purchase, repair, and certify used cars, the image of domestic used cars will improve not only domestically but also overseas," adding, "This will be a factor that can increase overseas sales of certified domestic used cars and can also enhance new car competitiveness."

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