Controversy over’reverse discrimination’ over Hyundai Motor’s 10-year ban on entry into the used car market

Input 2021.03.28 11:23 | Revision 2021.03.28 11:41

Amid controversy over the issue of entering the used car market by conglomerates, the auto industry and the used car industry are in a tight controversy, and controversy is arising over a bill that banned automobile manufacturers from entering the used car market for 10 years. Although the purpose of the bill is to protect small existing used car dealers, it is pointed out that it is an excessive regulation delaying the transparency of the used car market.

According to industry sources on the 28th, discussions between the automobile industry and the used car industry have not progressed since the’Used Car Win-Win Cooperation Committee’ promoted by the government and the ruling party collapsed last month. The used car industry is welcoming to the bill initiated by Congressman Cho, but the auto industry is raising opposition.

Most consumers have also expected that the used car market will become transparent when large companies such as Hyundai Motors enter the used car market, so the bill that prevents large companies from entering the used car market is criticized as a legislative that neglects the muddy used car market. It is said that healthy competition must be brought about by entering large companies.

There are also comments and Internet posts about “How long will I have to face the bad practices of the used car industry?” This is because there have been many cases where consumers have suffered damage due to the opaque used car market structure such as false sales and price manipulation. If you go to buy a car that has been sold on the Internet, it is common to say that there is no such car, but to put out more expensive items, or to systematically set up a call center to introduce false sales.

The used car trading business was designated as an industry suitable for small and medium-sized businesses in 2013, and new entry and expansion of large companies have been restricted. In early 2019, when the designation deadline expired, existing companies applied for designation of a livelihood-type suitable business, which restricts entry into large and medium-sized companies, but the Shared Growth Committee issued an unsuitable opinion. However, it has not been concluded for nearly a year.

Then Hyundai Motor (005380)The conflict with the used car industry ignited again at a state audit in October last year, revealing its willingness to enter the used car market. The car industry is in the position that it should allow large companies to enter the used car industry to guarantee consumers’ choice, while the used car industry The company is protesting that the automobile trading ecosystem will be destroyed and the damage of small and medium-sized companies will increase.

The’Used Vehicle Sales Win-Win Cooperation Act’ (a bill on win-win cooperation in the used car sales market), initiated by Congressman Cho, contained a content that prohibited automobile companies such as Hyundai Motor Company, Kia, and GM Korea from entering the used car market for 10 years.

However, before the 10-year deadline expires, a plan to coexist and cooperate with the existing used car industry was devised. Two years before the end of the regulation, a separate committee was formed to discuss a plan for win-win cooperation with automakers, and based on this, the Minister of SMEs and Startups finally decides whether to extend the regulation.

In order to reinforce accountability in the existing used car industry, Congressman Cho also included provisions such as public announcement of false sales providers, punitive damage compensation, and imposition of fines.

In the meantime, inside and outside the industry, most of the imported car makers are already doing certified used car business in Korea, so it has been argued that it is reverse discrimination that only domestic car makers are restricted from entering the used car market.

The Korea Automobile Industry Association (KAMA) also pointed out that domestic used cars are less competitive than imported cars as the domestic automobile industry’s entry into used cars is regulated.

According to the association, the price of the 2017 Genesis G80 in the domestic used car market fell 30.7% compared to the new car, but the E class of Mercedes, which is in the certified used car business, is 25.5% lower and the GLC is 20.6% lower. The 2017 Hyundai Sonata fell 45.7% and the BMW 3-series fell 40.9%.