Controversy between the used car industry and finished car makers has revealed the outlines of car makers’ entry into the used car market. The conflict came to an end when the government, through a deliberation committee, designated the period of recommendation for business adjustment that limits the number of used cars sold by Hyundai and Kia for the next two years.
The Ministry of SMEs and Startups held a small and medium-sized business adjustment deliberation meeting at the Ministry of SMEs and Startups in Sejong City, and decided on the final recommendations for entering the used car market of large corporations and announced them on the 28th.
According to the recommendations, large automakers can enter the used car market in May next year. However, it has decided to allow trial sales of certified used cars in the range of 5,000 units each from January to April 2023. From January next year, Hyundai-Kia Motors will conduct a certified used car business only for vehicles that have passed 200 quality tests among its vehicles within 5 years and 100,000 km.
From May 1, 2023 to April 30, 2024, Hyundai Motor’s market share will be limited to 2.9% and Kia’s to 2.1% of all used cars. Then, from May 1, 2024 to April 30, 2025, Hyundai Motor Company’s 4.1% and Kia 2.9% will increase slightly. The standard for calculating the number of units sold is the arithmetic average of the total number of units sold in the immediately preceding year and the number of units sold by business operators of the Ministry of Land, Infrastructure and Transport’s automobile transfer registration statistical data.
In addition, for the purchase of used cars from Hyundai and Kia, the purchase of used cars from customers who want to purchase a new car is only required to be purchased.
In addition, among the used cars purchased by Hyundai and Kia, used cars that are not sold as certified used cars are required to be auctioned. At this time, a condition was added that limits the number of auction participants to small and medium-sized enterprises (SMEs) or that the number of auction requests made to a used car auction company set by Hyundai Motor and Kia in consultation with the Association of Automobile Sales Business Associations must be at least 50% of the total number of auction requests.
The conflict between the used car industry and finished car companies seems to have come to an end through the announcement of the recommendations. In the meantime, the used car industry has been demanding that the finished car industry delay the start of business for the next two to three years and limit purchases and sales for up to three years after that. On the other hand, Hyundai and Kia insisted that it is absolutely impossible to delay business start and limit purchases, and market share can be limited within the limits of 4.4% in 2022, 6.2% in 2023, and 8.8% in 2024. It is analyzed that this recommendation is a compromise that reflects the demands of both sides to some extent.
In a press release, Hyundai-Kia Motors said, “The adjustment results are rather disappointing considering the needs of consumers who want changes in the used car market,” but “we will follow the recommendations of the Ministry of SMEs and Startups in a winning bid.”
In response to the announcement of this recommendation, the industry expected that there would be a positive function in the used car market in the future.
Professor Ho-geun Lee of the Department of Automobile at Daedeok University said, “In a situation where dissatisfaction and trust in the existing used car market have declined, the increase in used cars certified by large corporations in the market will have a positive effect on the consumer’s point of view of information asymmetry and freedom from the problem of false sales. “, explained.
By Kim Dong-hyun, staff reporter gaed@fortunekorea.co.kr
