Hyundai to Push into Used-Car Business
13 October, 2020
Hyundai is venturing into the used car market, raising fears that conglomerates will monopolize even a location 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 several problems in the way the car or truck market has traditionally operated, such as for example quality control and price evaluation. For consumer protection purposes alone, car manufacturers should be able to do business in the car or truck market."
The second-hand car market is estimated to be worth W20 trillion but is undoubtedly a prime exemplary case of the "lemon theory," where there is absolutely no trust between sellers and buyers because of asymmetry of information (US$1=W1,153).
Flooded with over 6,000 smaller businesses employing a lot 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. However, 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 take Hyundai and other conglomerates back. Most car importers already run approved used-car sales schemes, and domestic car manufacturers argue that puts them at an unfair disadvantage.
Hyundai insists that by negotiating the scope of business with current used-car businesses they can coexist, nonetheless they fiercely oppose it.
Kwak Tae-hun, a representative for a link of used-car dealers, said in the audit, "If car manufacturers enter the market, it'll put the livelihood of 300,000 people at risk" including their families of workers.
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