"Even if Large Corporations Enter the Used Car Market, Market Share Around 10% Within 5 Years"

Jeong Manki, Chairman of the Automobile Industry Association
"Concerns about monopoly in some quarters are groundless"

Used Car Market in Janghanpyeong, Dongdaemun-gu, Seoul

[Asia Economy Reporter Choi Dae-yeol] An analysis has emerged that even if major domestic automakers such as Hyundai Motor and Kia enter the used car market, their market share will remain around 10% within the next five years. This is far from the criteria used to judge monopolies in other industries or markets. While there is strong resistance from the existing used car industry against the entry of large corporations, the automakers argue that due to severe information asymmetry, consumer welfare does not improve, and the market has become more outdated due to government entry regulations, so there is no justification to block market entry.

At a forum held on the 10th, Chung Man-ki, chairman of the Korea Automobile Industry Association, made this estimate by comprehensively assessing domestic used car sales performance, average annual growth rate, market share and business plans of each automaker, and coexistence plans. If the used car transaction volume remains at the 2020 level of 2.6 million units, the market share of the five domestic automakers is expected to be about 10.4%. If the market grows as usual and about 3 million units are traded in 2026, the market share of large corporations is expected to be around 9%.

If the used car market grows to the level of advanced overseas markets with about 3.6 million units traded annually, the market share of large corporations would be only about 7.5%, and if the volume is around 2.1 million units, it is expected to be about 12.9%. Chairman Chung said, "Considering that the Fair Trade Act defines a monopoly as a single company having a market share of over 50%, or three or fewer companies having a combined market share of over 75%, concerns about monopoly are unfounded."

There was also a point made that as the boundary between manufacturing and service industries disappears, the influence of demanders has grown larger than that of suppliers in the manufacturing value chain. This means that consumers play a bigger role not only in simply making and selling products but also in pre-research and development (R&D) and after-sales service (AS) areas. Yoon Hyeong-hong, senior researcher at the Korea Automobile Manufacturers Association, said, "The longer the product lifespan and the more final the product, the greater the need for service to enhance product reliability after sales. Not only can maintenance costs be reduced through the accumulation of parts data, but various service integrations compared to intermediate goods are possible, promoting servicization."

Jung Myung-hoon, another senior researcher at the same association, cited examples of Caterpillar, the world's number one construction equipment company, and General Electric (GE), saying, "They provide services such as disassembling and reassembling equipment at the end of its life to update it, or attaching 250 sensors to aircraft engines to analyze data and predict the timing of parts replacement, opening new growth paths." Kim Kyung-yu, head of the System Industry Office at the Korea Institute for Industrial Economics & Trade, said, "Considering that industrial boundaries are becoming blurred due to digital transformation and new competitors are emerging, manufacturers need innovation and new business operations and models to secure competitive advantages."

Chairman Chung emphasized, "There is still a perception among some that government intervention and administrative efforts can solve the market's backwardness and widespread fraudulent behavior, but this is due to a lack of understanding of the characteristics of the used car market. The government must clearly recognize that fundamental solutions are only possible through promoting competition, such as removing entry barriers."

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