Hyundai to Push into Used-Car Business – The Chosun Ilbo (English Edition): Daily News from Korea
October 12, 2020
Hyundai is venturing into the used car market, raising fears that conglomerates will monopolize even an area that has traditionally been left to smaller entrepreneurs.
Hyundai executive vice president Kim Dong-wook said in a National Assembly audit last week, “There are many problems in the way the used car market has traditionally operated, such as quality control and price evaluation. For consumer protection purposes alone, car manufacturers must be able to do business in the used car market.”
The second-hand car market is estimated to be worth W20 trillion but is regarded as a prime example of the “lemon theory,” where there is no trust between sellers and buyers due to asymmetry of information (US$1=W1,153).
Flooded with over 6,000 small businesses employing more than 55,000 people, it remains a byword for sharp practices.
The market was reserved for SMEs in 2013, restricting the entry or expansion of big companies. But the protection expired last November and the National Commission for Corporate Partnership declined to renew it.
Now only the Ministry of SMEs and Start-ups can hold Hyundai and other conglomerates back. Most car importers already run approved used-car sales schemes, and domestic car manufacturers argue that this puts them at an unfair disadvantage.
Hyundai insists that by negotiating the scope of business with current used-car businesses they can coexist, but they fiercely oppose it.
Kwak Tae-hun, a representative for an association of used-car dealers, said in the audit, “If car manufacturers enter the market, it will put the livelihood of 300,000 people at risk” including their families of workers.