Hyundai Motor Group’s launch of B2C secondhand car business has met with headwind after a government ministry put a halt on the business launch temporarily, according to the industry on Tuesday.
The Ministry of SMEs and Startups last week advised the nation’s largest carmaker to temporarily suspend the launch of the certified used car sales business here. The advisory comes after the country’s association of used car dealership asked the ministry to intervene the automotive conglomerate’s market entry for its negative impact to the existing players.
Last month, the head of the Korea Automobile Manufacturers Association said finished carmakers will register for B2C secondhand car business licenses and establish physical spaces in January.
Despite rounds of talks involving the ministry, brands and microenterprises, no clear progress has been made for the past two years. The carmaker’s business launch can be delayed until the next government takes office, as the ministry council that serves as a mediator decided to hold the next meeting in March.
Following the ministry’s suggestion, although not compulsory, Hyundai Motor should stop related sales activity or purchase of related goods. But to do so or not is solely up to the carmaker.
Earlier, US retail chain Costco, which entered Korea in 1994, had also received a warning from the ministry. However, it pushed ahead with store openings in Hanam, Ulsan and Songdo despite resistance from small businesses.
Market insiders say that Hyundai Motor may also go ahead with its used car market entry, as it only costs them some 50 million won ($42,000) in penalty.
But as the biggest carmaker in the country, launch of a new business by ignoring the government‘s suggestion can cause backlash from public, as the industry has been protected by the government until recently for microenterprises.
In the 1990s, Hyundai Motor scrapped its plan for entry to the used car market. Since then, it has been operating a B2B used car auction business through its logistics arm Hyundai Glovis.
Korea’s used car market has became lucrative in recent years.
According to government data, Korea’s used car market was worth 20 trillion won in terms of the transaction amount, about twice bigger in size than the market for new cars.
In 2020, a record-high 3.95 million used cars were registered, while 1.91 million new cars were added to the market. With the advent of online car trading platforms, the transaction amount on the non-face-to-face platform for secondhand cars has grown 59 percent in five years to 40,000 cars.
By Kim Da-sol (email@example.com)