[Car Talk Forest] "Used Car Market, It Will Change Somehow..."

Attention on 'Carpletion' Entering Large Corporations

Seoul Jang-anpyeong Used Car Market

[Asia Economy Reporter Choi Dae-yeol] There are two used mid-size sport utility vehicles (SUVs) with the same engine displacement and similar mileage and model year. According to the Ministry of Land, Infrastructure and Transport's transfer registration data, one was traded at 21.08 million KRW, while the other was at 14.86 million KRW. That's a difference of over 40%. Among compact cars, there were transactions with price differences exceeding 60% under the same conditions. This stark contrast in information held by the parties involved clearly illustrates a characteristic of the used car market.

Although buyers are willing to pay, they cannot obtain sufficient information, leading to widespread distrust throughout the market. This is why the used car market is often likened to a superficially shiny but sour fruit or a lemon market. In English, "lemon" often refers to a defective product, especially cars. In the U.S., laws protecting consumers from frequently breaking down vehicles that are not properly repaired are called Lemon Laws.

Regardless of the industry, when large corporations infringe on local businesses, there is generally more negative perception, though the degree may vary. However, this is not the case with used cars. Hyundai Motor Company, which has dominated the domestic automobile market since the 2000s, was until a few years ago the target of criticism rather than mere critique by the general public, but recently even employees feel that external perceptions of the company have changed significantly.

Certified used car showroom of a certain imported car brand

While the improvement in product quality played a role, the decision to enter the used car business also contributed considerably. The existing used car industry protests that "prices will rise if large corporations enter," but consumers seem more willing to tolerate paying a bit more than to be deceived in a purchase.

Certified used cars, which are inspected and repaired as needed by the company before sale, have gained business viability domestically. Mercedes-Benz's certified used car sales increased 2.5 times from 3,790 units in 2017 to 9,700 units last year. BMW's sales (including MINI) rose from 8,955 units to 12,305 units during the same period. Considering that for ordinary people, cars are among the most expensive movable assets they purchase, the assurance of reliability is a key factor. Hyundai Motor Company has also decided to launch a certified used car business targeting vehicles within 5 years or 100,000 km.

The key issue, as in other markets, will be whether the level of service and pricing will be accepted in the market. Especially considering the industry's practice where new and used car prices influence each other, the entry of large corporations into the used car market is likely to impact not only used cars but also the entire upstream and downstream automotive industries. Whether this will fuel 'carflation' remains to be seen.

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