30 Trillion Used Car Market Entry by Large Corporations... Will It Be a 'Benefit' or a 'Harm' to Consumers?

Ministry of SMEs and Startups Holds Business Adjustment Council Meeting and Issues Recommendations
Used Car Market Improvement and Consumer Damage Reduction Expected
Some Existing Operators Express Concerns Over Price Increases

[Image source=Yonhap News]

Starting from May next year, Hyundai and Kia will be allowed to enter the used car sales market, drawing attention to the benefits and drawbacks for consumers. While some expect that the participation of large corporations will improve market trust and drive innovation in the existing industry, others are concerned about potential increases in used car prices.

The domestic used car market is estimated to be worth 30 trillion won. According to the Ministry of Land, Infrastructure and Transport, last year’s used car sales transactions reached approximately 3.87 million units, more than twice the number of new cars sold (1.74 million units). Although the market size is growing, consumer trust has been low, and chronic issues such as false or bait listings have been pointed out. It has been a typical "lemon market" with severe information asymmetry between consumers and sellers. Last year, there was even an incident where a victim of used car fraud took extreme measures.

In this situation, the Ministry of SMEs and Startups held a business adjustment review meeting on the 28th and approved a recommendation to officially allow Hyundai and Kia to sell used cars starting from May next year. This marks the end of controversy and tug-of-war three years after the expiration of the designation of used car sales as a small and medium-sized enterprise (SME) suitable industry (February 2019). To mitigate the shock to small businesses, the number of cars sold will be limited to 5% for one year from May 1 next year, and 7% for one year from May 1, 2024.

Civic groups and experts believe that consumer harm will naturally decrease with the entry of large corporations that value brand reputation into the used car market. Lim Ki-sang, head of the Automobile Citizens’ Union, said, "There has been a strong call in the used car industry to open the market and change the game," adding, "Whether large or small companies, the final winner should be the one that proposes ways to minimize consumer harm and gain trust." Professor Lee Ho-geun of Daeduk College’s Department of Automotive Engineering also predicted, "In a situation where dissatisfaction with the used car market is widespread, Hyundai and Kia are in a position where they inevitably contribute to quality through customer-centered services," and "They will be able to escape problems of information asymmetry and false listings."

However, there is also a forecast that used car prices may surge as demand concentrates on high-quality certified used cars (within 5 years or 100,000 km). Existing businesses have consistently pointed out this issue.

Meanwhile, the completed car industry claims that the recommendation does not consider consumers who want transparent and objective information and fails to resolve reverse discrimination between domestic and imported cars. A representative from the Korea Automobile Manufacturers Association explained, "Due to the one-year grace period and restrictions on stockpiling and sales caps during the pilot project period, completed car manufacturers will be subject to significantly more discriminatory regulations compared to platform large corporations and import car companies for a considerable period."

Hyundai and Kia stated, "We regret the one-year grace period recommendation for business commencement," but added, "We will comply with the recommendation from a magnanimous perspective and contribute to enhancing market transparency by establishing an integrated used car information open system."

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