April 25, 2024

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[THE INVESTOR] SK Holdings is likely to sell its used car business SK Encar amid its recent push for car-sharing service, according to news reports on Sept. 8.

The holding firm of SK Group plans to hold a preliminary bidding for four to five financial investors. Some large private equity firms have reportedly shown interest in the deal worth about 100 billion won (US$88.80 million) to 200 billion won.

Even after the sale, its online used car business SK Encar.com will continue operations at least until 2019 under a partnership deal with Carsales.com, an Australian company that acquired a 49.9 percent stake in the firm.

SK Encar posted 818.9 billion won revenue and 10 billion won operating profit last year. SK Encar.com’s sales of 33.7 billion won made up just 4 percent of the total revenue. 

Despite the overall growth of the nation’s used car sector, SK Encar has suffered from slowing profits. Its market share last year was less than 3 percent.

The nation’s antitrust law that earmarks used car business for small and medium enterprises is also believed to have influenced the decision as the group faces regulatory limits for business expansion.

Following the sale, industry watchers say SK is likely to focus more on its car-sharing business. It acquired a 20 percent stake in Socar, the nation’s No. 1 car-sharing platform, for 58.9 billion won last year and invested 15 billion won in May this year.

SK Holdings announced on Sept.7 that it has joined a US$92 million Series D funding for San Francisco-based car-sharing company Turo together with Germany’s Daimler and other investors. Turo, one of the largest car-sharing services in Silicon Valley, provides peer-to-peer car rental services in around 5,000 areas in the US, the UK and Canada.

By Park Ga-young (gypark@heraldcorp.com)