[규제가 낳은 역차별②]Domestic automakers groaning against reverse discrimination
While domestic cars couldn’t stick to their feet due to used car market regulation, imported car companies were getting bigger
[아시아경제 이창환 기자] Although the domestic used car industry is growing every year, it is considered one of the markets with severe reverse discrimination between foreign and domestic companies.
While domestic automakers such as Hyundai Motor and Kia were unable to step into the government’s business restrictions on conglomerates, all imported car companies such as Mercedes-Benz, BMW, and Audi are growing up in the used car certification market as a foothold.
It is also pointed out that the used car market continues to be in turmoil with illegal transactions and fraudulent sales while the entry structure is distorted. It is a paradox posed by government regulations to create a fair economy.
Will the used car market grow bigger, become a playground for imported cars?
According to the Ministry of Land, Infrastructure and Transport on the 5th, the number of used cars traded in Korea last year was 3.87 million units, the highest ever, an increase of 7.2% from the previous year. Considering the fact that the used car trading market has been growing every year since 2010, it is clear that it will exceed 4 million units this year. Considering that the number of newly registered cars last year was 1.91 million, it is analyzed that the domestic used car market has more than doubled compared to the new car market.
The growing used car market is similarly occurring not only in Korea but also in major countries. The size of the used car market in the U.S. increased from 36.2 million units in 2014 to 4,081 million units in 2019, and during the same period, China increased from 9.2 million units to 14.92 million units.
The reason the used car industry is booming globally is that the number of customers turning to used cars that are relatively cheaper than new cars has increased as the long-term economic recession continues, and the number of online platform operators has increased as Internet transactions are active.
In addition, imported car brands that have settled in the domestic market through new car sales have established their own certified used car sales system, and it is also considered as a reason to increase their presence in the used car market.
In fact, in the case of BMW, sales of certified used cars jumped from 3820 units in 2014 to 11,687 units in 2018, and Mercedes increased from 550 units to 4640 units in the same period. During the same period, Audi increased from 0 to 4582, and Jaguar Land Rover from 61 to 2677.
Imported cars with reasonable price, domestic cars with ankle
Like this, although the used car market is growing and imported cars are rapidly growing their business based on the popularity of the brand, local automakers such as Hyundai Motors and Kia have been blocked by government regulations and backlash from the used car industry, so they are unable to even start their business.
The used car sales business was designated by the Shared Growth Committee as a’suitable business for small and medium-sized businesses’ in 2013, preventing domestic automakers from entering the market, but the deadline in early 2019 expired. After the expiration of the deadline, domestic automakers are preparing to enter the used car market, but it is not easy. This is because the used car industry is still protesting and demanding redesignation of a suitable industry for livelihoods.
The domestic automobile industry argues that domestic used car competitiveness is lower than imported cars and consumer distrust is not improving as domestic finished car makers are regulated in the used car trading market.
According to the Korea Automobile Industry Association, the price of the 2017 Genesis G80 in the domestic used car market fell 30.7% compared to new cars as of last year, but the E class of Mercedes, which is in the certified used car business, fell 25.5% and the GLC fell 20.6%. The 2017 Hyundai Sonata fell 45.7% and the BMW 3-series fell 40.9%.
On the other hand, in the US, where there are no restrictions on entering the used car market for finished car makers, there is no significant difference between the depreciation rates of Korean brands and used cars of foreign brands, and depending on the model, the price of Korean brands is found to be rather high.
In particular, in the domestic used car market, where participation in the used car market is limited by the domestic finished car industry, consumers are more concerned about damage to consumers due to incomplete transactions such as false sales due to the asymmetry of information between sellers and buyers, a chronic problem in the used car market. According to the results of the consumer perception survey of the used car market released by the Korea Economic Research Institute at the end of 2019, 76.4% of the surveyed recognized that the domestic used car market was opaque and underdeveloped.
Man-ki Chung, chairman of the Korea Automobile Industry Association, said, “It is time to differentiate and upgrade the used car market as well as new cars to meet the demands of consumers that are becoming more sophisticated, individualized, and diversified according to the recent increase in income.” Considering this enormous point, the reverse discrimination between domestic automakers and imported cars must be resolved as soon as possible.”
(Left) The New Mercedes-Benz GLA interior / (Right) The New Grandeur exterior
Reporter Chang-Hwan Lee [email protected]