Entry of Large Corporations into Used Car Market Fails Again... Ball Back in Government's Court

The Ministry of SMEs and Startups Likely to Hold Deliberation Committee Meeting for Discussion

[Image source=Yonhap News]

[Asia Economy reporters Changhwan Lee and Bokyung Kim] Negotiations between the completed car industry and the used car industry regarding the entry of large corporations into the used car sales market, led by the Democratic Party of Korea, have ultimately broken down.

With the failure to reach a win-win agreement between the completed car industry and the used car industry, the Democratic Party has passed the responsibility back to the government. The Ministry of SMEs and Startups, the responsible department, plans to soon hold a review committee meeting to discuss the opening of the used car market.

According to related industries on the 10th, the "Used Car Sales Industry Development Council," formed mainly by the Democratic Party's Euljiro Committee along with the completed car and used car industries, declared a breakdown in the final negotiations held the previous day and decided to hand over the agenda to the Ministry of SMEs and Startups.

Launched on June 9, the Used Car Sales Industry Development Council consists of stakeholders including the Euljiro Committee, the Ministry of SMEs and Startups, the Ministry of Land, Infrastructure and Transport, the National Federation of Automobile Sales Business Cooperatives, and the Korea Automobile Manufacturers Association.

The council initially planned to prepare an agreement through intensive negotiations between the completed car and used car industries within three months. However, after failing to reach an agreement by last month, no progress was made even during an additional week of negotiations.

Both sides of the completed car and used car industries had gathered opinions to allow completed car manufacturers to collect and sell used cars but limit sales to only 10% of the total volume. However, there were significant disagreements during detailed discussions regarding the interpretation of the volume that could be handled, and opinions also differed on the scope of collection allowed. 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 was also an obstacle to agreement.

Accordingly, whether to allow large corporations to enter the used car market is expected to be decided by the Ministry of SMEs and Startups as soon as possible. The used car sales industry, with a market size reaching 20 trillion won, has been designated as a small and medium enterprise suitable industry since 2013, restricting new entries and expansions by large corporations.

When the designation period expired in early 2019, existing used car companies applied for designation as a livelihood-type suitable industry to restrict entry by large and medium-sized corporations, but the Win-Win Growth Committee issued an unfavorable opinion in November of that year.

Therefore, the Ministry of SMEs and Startups only needs to decide whether to allow large corporations to enter the used car market. However, under the pretext of protecting the used car industry, the ministry has attempted to reach an agreement among stakeholders but ultimately failed.

Going forward, the Ministry of SMEs and Startups is expected to hold a livelihood-type suitable industry review committee to deliberate and decide on the agenda. The review committee is composed of private experts and representatives from each industry.

Park Sang-yong, head of the Win-Win Cooperation Support Division at the Ministry of SMEs and Startups, said, "With the final breakdown of discussions in the National Assembly, the review committee will continue discussions according to the procedures prescribed by law," adding, "The schedule for holding the review committee has not yet been decided." He added, "Since all 15 review committee members are private citizens, independent and neutral decision-making will be made."

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