Path Opens for Large Corporations to Enter Used Car Market... Securities Firms' Related Stocks Surge

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] The entry of major automakers such as Hyundai Motor and Kia Motors into the used car market has been permitted, causing related stocks to surge significantly.

According to the securities industry on the 19th, used car-related stocks closed with substantial gains the previous day. AutoN rose 30% (4,350 KRW) from the previous trading day to close at 18,850 KRW, hitting the upper limit. Lotte Rental, which announced its entry into the used car retail market, closed at 41,600 KRW, up 8.62% (3,300 KRW) from the previous day. K Car surged to 37,000 KRW early in the session but gave up some gains later, closing at 31,400 KRW, up 3.80% (1,150 KRW) from the previous day. Hyundai Glovis, a Hyundai Motor affiliate engaged in used car auctions, also closed at 180,000 KRW, up 6.19% (10,500 KRW).

This strong performance is interpreted as a result of the opening of the path for large corporations to enter the used car market. According to the Ministry of SMEs and Startups, the 'Committee on Livelihood-Suitable Industries' held at the Government Complex Sejong on the 17th reviewed and decided not to designate the used car sales business as a livelihood-suitable industry. The used car sales business has been designated as a small and medium enterprise (SME) suitable industry since 2013, restricting large corporations from entering the market.

Accordingly, the entry of domestic major automakers such as Hyundai and Kia into the used car market is expected to accelerate. Hyundai and Kia are already known to have applied for automobile sales business registration in Yongin City, Gyeonggi Province, and Jeongeup City, Jeollabuk-do. Declarations of entry by large corporations related to used cars have also continued. Lotte Rental, which operates used car auction sites, stated, "Following the Ministry of SMEs and Startups' Committee on Livelihood-Suitable Industries' decision not to designate the used car sales business as a livelihood-suitable industry, we have decided to enter the used car B2C (business-to-consumer) market."

The securities industry generally expressed a positive outlook regarding the decision to allow large corporations to enter the used car market. It is analyzed that structural growth is expected due to the revitalization of the used car market. Kim Minseon, a researcher at Kiwoom Securities, said, "Efforts to resolve information asymmetry, such as the introduction of certified used cars, will increase across the industry, and online sales are also expected to expand," adding, "Structural growth of the domestic used car market is anticipated." Kang Sungjin, a researcher at KB Securities, also analyzed, "If consumer perception of used cars improves due to Hyundai Motor Group's entry into the used car market, the domestic online used car market could also benefit."

On the other hand, there were concerns about intensified competition. Kim Jinwoo, a researcher at Korea Investment & Securities, said, "Lotte Rental can now enter the used car retail market, but there are concerns about intensified auction competition," and added, "K Car is expected to see a reduction in used car inventory secured through Hyundai and Kia dealerships, but if the market grows, it will benefit as a dominant player."

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