Hyundai Motor and Kia certified pre-owned cars to compete in ‘needle hole’ by 2025… Only 5% quantity next year

When the Ministry of SMEs and Startups delayed entry into the used car market by one year, related industries are pouring out complaints. It is criticized for ignoring the used car market, which is evaluated as a representative of the lemon market (a market where low-quality products are active). In particular, even if Hyundai Motor and Kia enter the market next year, there is an observation that it will be difficult to expect market changes right away as sales volume is tied at 5%.

According to related industries on the 29th, the Ministry of SMEs and Startups held a small and medium-sized business adjustment deliberative meeting the day before and decided on a business adjustment recommendation to defer the sale of used cars by automakers to May next year for one year. The used car sales business was excluded from the industry suitable for livelihoods in March of this year, but the government authorities drew the recommendation on the grounds of damage to the used car industry workers.

Accordingly, Hyundai and Kia can sell used cars from May next year. However, the pilot project will be allowed between January and April next year, and Hyundai and Kia can sell 5,000 certified used cars each.

In addition, the number of units sold and purchase conditions were restricted until 2025. From May 1, 2023 to April 30, 2024, only 5% of the total used cars sold, and only 7% from May 1, 2024, for one year. In the case of Hyundai Motor Company, it is 2.9% from May 1, 2023 to April 30, 2024, and 4.1% from May 1, 2024 to April 30, 2025. During the same period, Kia sold 2.1% and 2.9%, lower than Hyundai Motor.

The number of units sold is calculated using the average value of the total number of units traded and the number of business transactions in the previous year as a standard, and calculated as 1,85,4313 units, which is the average value of 2532,770 units and 1,175,855 units sold by Hyundai Motor Company and Kia last year. If this applies, Hyundai will be able to sell only 53,775 units and Kia 38,940 units next year.

It also placed conditions on the purchase. Certified used cars can only be purchased when Hyundai and Kia customers request that they sell their branded used cars when purchasing a new car. Volumes that are not sold as certified used cars must be auctioned off, and auction participants must only request 50% or more of the total volume from small and medium-sized enterprises, Hyundai Motor Group, and operators stipulated by the Association of Automobile Sales and Trade Associations.

This recommendation is based on the Large and Small Business Cooperation Promotion Act. Failure to comply with the enforcement order may result in imprisonment of up to two years or a fine of up to 150 million won.

When the recommendation was decided, the Korea Automobile Manufacturers Association said, “The establishment of a one-year grace period and restrictions on the acquisition and sales ceilings within the trial period are the result of ignoring consumers’ desire for market advancement.” “The worst regulation is creativity, innovation, and Entry regulations limiting competition.”

An official from the industry said, “Consumers who want to purchase certified used cars from Hyundai Motor and Kia with guaranteed quality will be flooded with fake products in the used car market. This could have the adverse effect of increasing used car prices.”

The existing used car industry said that it would review legal measures, such as applying for an injunction to suspend the effect, in opposition to the recommendation of the council. However, experts are of the opinion that it will be difficult to actually overturn the plate as it is the final arbitration plan after years of conflict.

Ho-geun Lee, a professor of automobiles at Daedeok University, said, “Even though used car companies have already been protected by law for a long time for nine years, consumer complaints about the market have not been resolved at all, demonstrating their inadequacy in self-cleaning ability. Despite the lack of justification, this recommendation is given an additional grace period of three years.”

[그래픽=아주경제]