"Used Car Debate Is Not Over Until It's Over: Business Adjustment Review Pending"

"Used Car Sales Are Not Suitable as Livelihood-Type Businesses"... Decision by Vote
Immediate Business Start Difficult Due to 'Recommendation for Temporary Suspension of Business Start'
Agreement Expected Through Voluntary Adjustment Between Both Sides → Next Step Is Business Adjustment Deliberation Committee

[Image source=Yonhap News]

As the used car sales industry is concluded not to fall under the category of livelihood-type suitable industries, the 'second round' determining whether large corporations such as Hyundai Motor and Kia will enter the used car market is set to unfold. The key issue is to establish a win-win plan deciding the extent to which large corporations can enter the used car market to protect existing small and medium-sized enterprises.

On the 17th, the Ministry of SMEs and Startups held a win-win suitable industry review committee meeting at the Government Complex Sejong and resolved not to designate the used car sales industry as a win-win suitable industry. The review committee consisted of 15 private members, including representatives from small business owners, SMEs, mid-sized companies, large corporations, and experts. The meeting, which started at 10 a.m., ended around 8 p.m. It is reported that since both sides failed to reach an agreement until the end, the conclusion was made by a secret ballot. The voting results showed 5 votes for designation as a livelihood-type suitable industry, 8 votes against, and 1 abstention.

On that day, the committee judged that the proportion of small business owners in the used car sales industry is low and that it does not meet the criteria for small-scale business. They also considered the consumer welfare enhancement effects such as securing product reliability through the entry of finished car manufacturers and expanding consumer choice. Previously, in November 2019, the Win-Win Growth Committee also issued an opinion stating that the used car sales industry partially does not meet the criteria for suitable industries.

Jo Joo-hyun, Director of the Small Business Policy Office at the Ministry of SMEs and Startups. Director Jo serves as the chairman of the business coordination review committee, which will decide on the entry of large corporations into the used car market in the future.
[Image source=Yonhap News]

However, the fact that the used car sales industry is not designated as a suitable industry does not mean that large corporations are immediately allowed to enter. This is because there is another system called the 'Business Adjustment Review Committee' to protect the business areas of small and medium-sized enterprises. Small and medium used car organizations submitted a business adjustment application to the Ministry of SMEs and Startups in January, and the ministry has recommended a temporary suspension of business commencement to Hyundai Motor and Kia, who are moving fastest in entering the used car market. Hyundai Motor applied for automobile sales business registration in Yongin, Gyeonggi Province, and Kia applied in Jeongeup, Jeollabuk-do. Since local governments' approval would allow them to start business immediately, the ministry hastened to issue the temporary suspension recommendation.

According to related laws, the minister of SMEs and Startups can set the recommendation period within three years. Also, the review committee must complete deliberation on the agenda within one year from the date of the business adjustment application and may extend the deliberation period by up to one year if necessary.

A ministry official said, "Discussions are currently underway in the voluntary adjustment council composed of 19 members, including representatives from large and small enterprises, consumer groups, distribution industry, and legal experts," adding, "After a damage survey on small and medium enterprises, the business adjustment review committee will be convened." If an agreement on the extent of large corporations' entry is reached through voluntary adjustment, it will be delivered to the business adjustment review committee chaired by the head of the Small Business Policy Office of the Ministry of SMEs and Startups.

An official from the used car industry said, "It is not over until it is over," adding, "With voluntary adjustment and the business adjustment review committee still remaining, immediate business commencement by large corporations is difficult."

A representative from the Korea Federation of SMEs also stated, "Hyundai Motor and Kia are global finished car manufacturers, but entering the used car sales business is excessive," arguing, "It is equivalent to threatening the livelihood of 60,000 used car dealers." He added, "We hope discussions will proceed in a direction where large and small enterprises can coexist in the future."