Used Car Industry Expects Market Expansion with Entry of Large Corporations

Domestic Used Car Market Stagnates for Years
Consumers Turn Away Due to Opaque Trading Practices
Used Car Industry Expects Market Expansion with Large Corporations' Entry
Intense Competition to Secure Nearly New Vehicles
Used Car Prices Expected to Rise Inevitably for the Time Being

The used car industry expressed expectations that the market size will grow as market trust increases due to the entry of Hyundai Motor Company and Kia, leading to more people seeking used cars. At the same time, it is forecasted that used car prices will rise for the time being as competition to secure nearly new used car inventory intensifies.

According to data from Kaizyu Data Research Institute on the 19th, the actual transaction volume of used cars in Korea from January to September this year was about 1,803,200 units, showing only a 2.4% increase compared to the same period last year. Compared to the new car market, which grew by 6.5% year-on-year during the same period, this indicates relatively stagnant growth. Over the past five years, the domestic used car market size has remained around 2.3 to 2.5 million units. The industry pointed out that the main cause of this growth stagnation is the opaque trading practices.

Until now, the used car market has been a typical "lemon market." Sellers have all the information about the inventory, but buyers have to trust only the seller's word. There was severe information asymmetry. Even if buyers suffered damages, it was difficult to raise objections or receive compensation.

In the past, the industry itself was classified as a livelihood-type suitable business, leading to a proliferation of small-scale companies. It was difficult to expect sales regulations or self-purification within the market. Some companies engaged in false listings, false records, and forced sales, fostering a negative perception of the used car market.

The industry expects that with Hyundai Motor Company and Kia entering the market, consumers' negative perceptions of used cars will improve, leading to market expansion. A used car company official said, "Used car companies that secure many verified vehicles will be able to enjoy the trickle-down effect of market pie expansion."

However, as competition to secure nearly new used car inventory intensifies, used car market prices are expected to rise for the time being. If the purchase prices in the used car industry increase, consumer selling prices will naturally rise as well. Hyundai certified used cars undergo inspections of over 200 items, which increases the costs related to merchandising. The price increase of nearly new domestic used cars will lead to a general price increase across the domestic used car market.

Another used car trading platform company official said, "The competitiveness of the used car industry will vary depending on which company offers generous purchase prices," adding, "From the consumer's perspective, regardless of whether it is a large or small company, they will inevitably act according to practical benefits."

Lemon Market

A lemon market refers to a market where buyers cannot ascertain product quality, resulting in only defective products circulating. Sellers know every detail about the inventory, but buyers must trust only the seller's word. The used car market is a typical lemon market. In fact, the term "lemon market" originated from the used car market. The Volkswagen Beetle released in 1965 in lemon color had a particularly high number of defects. "Lemon" has come to symbolize products that look fine on the outside but are rotten inside, or a market where such products circulate widely.

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