Hyundai Motor and Kia to Decide on Used Car Business Entry by the End of This Month

by Choi Donghyeon

Published 21 Apr.2022 15:09(KST)

The Korea Automobile Dealers Association held a rally near the National Palace Museum in Jongno-gu, Seoul last month, opposing the entry of large corporations into the used car market.

[Asia Economy Reporter Choi Dong-hyun] The Ministry of SMEs and Startups announced on the 21st that it plans to hold a Small Business Dispute Mediation Committee meeting at the end of this month to reach a conclusion regarding the business adjustment related to Hyundai Motor and Kia's entry into the used car market.

The business adjustment for the used car sales industry has been ongoing since February, with two rounds of voluntary adjustments between the parties and four meetings of the Voluntary Business Adjustment Council involving private committee members, all aimed at reaching an agreement. However, the differences in positions have yet to be narrowed.

Currently, the used car industry is demanding a 2 to 3-year delay in business commencement and restrictions on purchasing and sales for up to 3 years thereafter. On the other hand, Hyundai Motor and Kia maintain that delaying business commencement and restricting purchases are absolutely unacceptable, but sales restrictions could be applied within the ranges of 4.4% in 2022, 6.2% in 2023, and 8.8% in 2024.

Considering that both sides are at a stalemate without any concessions, it is highly likely that a recommendation compromising the positions of both parties at an appropriate level will be adopted.

The Business Adjustment Committee can recommend delaying acquisition, commencement, or expansion periods within three years to secure business opportunities for small businesses, or recommend reducing production items, quantities, or facilities.

Previously, the Committee for Designation of Suitable Livelihood Industries did not designate the used car sales industry as a suitable livelihood industry but anticipated significant damage to small and medium enterprises and small business owners if Hyundai Motor and Kia entered the used car market. Accordingly, it submitted an ancillary opinion stating that measures considering these points are necessary at the upcoming Small Business Dispute Mediation Committee.

An official from the Ministry of SMEs and Startups explained, "Although official voluntary adjustments will be suspended, efforts to reach an agreement will continue until the Business Adjustment Committee meeting is held."