"Can't Delay Any Longer"... Hyundai Motor and Other Automakers Officially Announce Entry into Used Car Market in January Next Year

Jeong Manki, President of Korea Automobile Manufacturers Association, "Can't delay any longer... Start business registration and securing space"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] The domestic complete vehicle industry, led by Hyundai Motor Group, has officially announced its entry into the used car market for the first time in history starting January next year. This comes about three years after the Win-Win Growth Committee issued an opinion deeming the used car sales business as ‘unsuitable’ for designation as a livelihood-type small business.

On the morning of the 23rd, Chung Man-ki, chairman of the Korea Automobile Manufacturers Association (KAMA), attended the 15th Industrial Development Forum hosted by the Korea Industrial Alliance Forum (KIAF) at the Automobile Hall in Seocho-gu, Seoul, and stated, "The domestic complete vehicle industry will begin the used car business starting next month by proceeding with necessary procedures such as business registration and securing physical space."

Three years of setbacks... Preparing full-scale market entry riding on public opinion

This appears to be a practical judgment to start the necessary preparations first rather than waiting indefinitely for the government’s decision. The issue of the complete vehicle industry’s entry into the used car sales market has been at a standstill for three years due to resistance from the used car sales sector since the Win-Win Growth Committee judged in 2019 that the used car sales business was unsuitable for designation as a livelihood-type small business.

Currently, there is no clear legal basis to block the complete vehicle industry’s entry into the used car market. According to the current Automobile Management Act, automobile management businesses such as used car sales are operated under a ‘registration system’ by the relevant local government. Furthermore, the designation of small and medium-sized enterprises as suitable business sectors, which had previously blocked entry, expired on February 28, 2019.

Chairman Chung emphasized, "There are no legal restrictions on complete vehicle manufacturers entering the used car market, but considering that existing dealers have applied to have this sector designated again as a livelihood-type small business, we have refrained from entering despite strong consumer demands over the past three years. However, due to continuous consumer demands, we have judged that we can no longer delay entry into the used car market."

However, the complete vehicle industry plans to respect the Ministry of SMEs and Startups’ remaining review procedures and results regarding the livelihood-type small business designation while actively advancing market entry.

Hyundai Motor’s historic first entry into the used car market... Expectations for transparency and advancement

With this declaration of entry, Hyundai Motor Group will directly (B2C) enter the used car market for the first time in history. It is known that Hyundai Motor Group has been preparing various plans, including building used car sales-related facilities in some areas of Gyeonggi Province.

Entry into the used car market is one of Hyundai Motor Group’s long-cherished goals. In the 1990s, Hyundai Motor Group considered entering the used car business in some regions but abandoned the idea. Recently, it has been operating only a business-to-business (B2B) used car auction business through Hyundai Glovis.

Hyundai Motor Group’s renewed interest in entering the used car market stems from the evolving nature of the complete vehicle industry, which is shifting from simple ‘sales’ to ‘services.’ Recently, global complete vehicle companies have been enhancing their brand image and exploring various new business opportunities by managing the entire lifecycle of automobiles, including production, sales, operation, maintenance, used cars, and scrapping.

An industry insider said, "For the complete vehicle industry, the advantage lies in managing the entire process, including production, sales, and used car sales, which allows accumulation of big data related to the vehicle’s lifecycle. Based on this, various business fields can be explored."

The market entry of Hyundai Motor Group and other complete vehicle manufacturers is also expected to be an important link in ‘restoring trust’ from the consumer perspective. Unlike before, when consumers suffered significant damage due to asymmetric information, quality control and price estimation based on Hyundai Motor Group’s infrastructure and reliability will become possible.

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