Hyundai·Kia 'Used Car Sales' Decision Today... Industry Engages in 'Hunger Strike' (Comprehensive)

Ministry of SMEs Holds Business Adjustment Deliberation on 28th
Announces Decision on Timing and Scale of Large Corporation Entry
"Compromise Between Both Sides... Preparing a Rational Plan"
Industry Strongly Opposes... "Ministry of SMEs Neglecting Duties"

The Korea Automobile Dealers Association held a rally on the 24th near the National Palace Museum in Jongno-gu, Seoul, opposing the entry of large corporations into the used car market. Photo by Moon Honam munonam@

[Asia Economy Reporter Kim Bo-kyung] The 'Small and Medium Enterprise Business Adjustment Deliberation Committee,' which will determine the timing and scale of Hyundai Motor Company and Kia Motors' entry into the used car market, is being held today (28th). The existing used car industry is strongly opposing the entry of large corporations into the market, even warning of a 'hunger strike.'

The Ministry of SMEs and Startups will hold the 'Small and Medium Enterprise Business Adjustment Deliberation Committee' at its office in Sejong City today to decide whether to permit Hyundai and Kia to engage in used car sales.

The committee consists of a total of 10 members, including the Director of the Small Business Policy Office of the Ministry of SMEs and Startups (chairperson), representatives from the Ministry of Trade, Industry and Energy, the Fair Trade Commission, private experts, and industry stakeholders.

Used car sales were designated as a suitable business for small and medium enterprises in 2013, restricting new entries and expansions by large corporations. The designation expired in February 2019, and last month, the designation as a livelihood-type suitable business was also canceled, opening the door for large corporations to enter. The domestic used car market is estimated to be worth 30 trillion won.

As Hyundai and Kia began preparations to enter the market, 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.

[Image source=Yonhap News]

Since then, two rounds of voluntary adjustments between the parties and four rounds of voluntary business adjustment councils involving private members have been held to attempt mediation proposals from both sides.

However, as the gap between the two sides' positions has not narrowed and discussions have reached a stalemate, the Ministry of SMEs and Startups has expressed its intention to conclude the used car controversy by holding the first meeting of the business adjustment deliberation committee today.

A ministry official said, "If voluntary adjustment fails, the committee will be convened to issue recommendations, and large corporations must comply with these recommendations. The committee will discuss based on multiple proposals to derive the most reasonable recommendation."

He added, "The recommendation will likely be a compromise between the positions of large and small-medium enterprises at an appropriate level. It will be difficult to side entirely with either extreme."

If a large corporation fails to comply with the recommendation on business adjustment, it may face imprisonment of up to two years or a fine of up to 150 million won.

The used car industry expressed bewilderment at the ministry's decision. They voiced concerns about a 'hasty deliberation,' suggesting that the ministry is rushing to conclude the used car controversy ahead of the regime change.

An industry official criticized, "The law stipulates that deliberation must be completed within one year after the business adjustment application date, but the ministry unilaterally notified that it would conclude at the first deliberation."

[Image source=Yonhap News]

The used car industry is demanding that large corporations such as Hyundai and Kia delay business commencement by 2 to 3 years and restrict purchases and sales for up to 3 years thereafter, seeking a grace period of up to 6 years.

According to the Act on the Promotion of Mutual Growth between Large, Small and Medium Enterprises, the committee may recommend postponing the timing of acquisition, commencement, or expansion of large corporations within 3 years or reducing production items, quantities, or facilities. Subsequently, the Minister of SMEs and Startups may extend this period once within 3 years.

Hyundai and Kia maintain that postponing business commencement and purchase restrictions are absolutely unacceptable. They stated that restrictions on used car sales could be imposed within the ranges of 4.4% this year, 6.2% next year, and 8.8% in 2024.

In response, an industry representative said, "Large corporations will dominate the wholesale market by purchasing existing cars when selling new cars to consumers. With distribution margins added, car prices will rise, ultimately burdening consumers."

The Korea Automobile Dealers Association Federation, a used car organization, announced that from today, Chairman Lim Young-bin and heads of city and provincial associations will begin a relay hunger strike in front of the Ministry of SMEs and Startups building.

The Korea Federation stated, "For the Ministry of SMEs and Startups to fulfill its duties, it must stand on the side of the vulnerable during the business adjustment process for Hyundai and Kia, the last bastion of small business owners, following the decision not to designate a livelihood-type suitable business. It must no longer neglect its duties," raising their voices.

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