Used Car Business, The Real Game Is Opening

Hyundai Motor Group Faces Less Pressure for Business Success
① New and Used Car Prices Likely to Rise Due to Push and Pull
② Enables Establishment of Full Vehicle Lifecycle Business Model
③ Enhances Market Cleanup and Industry Leadership Image

[Image source=Yonhap News]

[Asia Economy Reporter Choi Dae-yeol] Even before the system was organized to allow large corporations to sell used cars to general consumers, Hyundai Motor Group had been quietly preparing in various ways. They officially announced their entry in 2020, the year following the end of the period designated as a livelihood-type suitable industry, and even when controversies arose within related ministries and the industry, they internally planned business directions and refined detailed blueprints. This background also enabled them to announce a concrete business plan centered on certified used cars earlier this month, before the re-designation of the livelihood-type suitable industry was decided.

Although Hyundai’s preparation process for the used car business was not smooth, the burden of business success is relatively low. This is partly because the expectations of potential demanders are high, making it likely to settle quickly, and also because they proposed a market share cap as part of a win-win plan with the existing used car sales industry. On the other hand, the existing used car industry has significant concerns about the entry of large corporations, to the extent of saying "our right to survive is threatened." This is why Hyundai is perceived as holding the trump card.

First, the industry expects Hyundai’s dominance in vehicle price setting to become even stronger. Hyundai and Kia’s market share in the domestic finished car market approaches 90%. Including imported cars, it exceeds 70%. With such a massive market share and strong control, the supplier’s market advantage has solidified further due to production disruption issues over the past one or two years.

In the case of the certified used car business, the costs incurred during maintenance and certification processes are inevitably higher than those for regular used cars. The increase in used car prices could lead to a chain reaction where new car prices rise, and as they rise, used car prices increase again. Although Hyundai Motor Group plans to establish dedicated certified used car centers, they can also utilize existing maintenance networks, and since the general consumer sales network will mainly be conducted online, the initial infrastructure burden for Hyundai is not very large.

They can also enhance service capabilities related to lifecycle management, a key topic in the manufacturing industry. Rather than just selling the final product, they can increase influence in the large used car market through maintenance, repair, and resale, while accumulating a substantial amount of customer information, including accident history. Although online trading platforms have proliferated rapidly, the integrated information portal that Hyundai will introduce is expected to grow quickly, backed by massive capital and information power. Hyundai Glovis, a Hyundai Motor Group affiliate, has also gained strong influence in the used car auction market, largely due to the increased information it holds.

There is also a clear reflective benefit from the significant distrust in the existing used car market caused by false or bait listings. The public psychology is that paying somewhat higher prices is acceptable, but being deceived is not. The public opinion, which was previously negative toward Hyundai citing domestic discrimination, has turned around around the time of their entry into the used car market, reflecting expectations that they will rectify the opaque market.

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