Hyundai Motor Group gears for second-hand car business in 2023

Second-hand car market [Photo by Lee Chung-woo]

Hyundai Motor Co. and Kia Corp. are in the final preparations to enter the second-hand car market next year to inspect, certify and sell used cars with their own names to local customers.

According to sources on Monday, the South Korean car-manufacturing group is reviewing Yangsan, Gyeongnam Province as a potential site for car storage and distribution, while working on a new website as a channel for trade.

All details are undecided as of now except that sales will begin in earnest in the second half of the year, according to a group official.

Back in April, the Ministry for SMEs and Startups decided not to limit used car sales to small businesses, paving the way for big companies like Hyundai Motor Group to join the market. Hyundai Motor and Kia were each allowed to sell about 5,000 used cars from January next year on a trial basis.

Imported car brands are already selling their certified used cars. Mercedes-Benz and BMW sold about 10,000 units last year.

A second-hand car market is a lemons market where the sellers are better informed than buyers about the quality of good for sale like used cars. Hyundai Motor Group’s entrance into the market is expected to address growing consumer complaints arising from asymmetric information in trade.

Kia also plans to build reconditioning centers dedicated to certified used cars nationwide, responsible for customer experience such as car diagnosis, commercialization, quality certification, exhibition and test drive.

The reconditioning center provides a real-time inspection space where consumers can directly check the process of transforming used cars into high-quality vehicles.

The two Korean carmakers are also working on a trade-in program where they buy used Hyundai or Kia cars from customers and offer discounts when they buy new models.

To minimize the impact on local firms already in the used car business, Hyundai Motor Group will limit sales to its own second-hand cars that have been used for less than 5 years and have a mileage of less than 100,000 kilometers.

The number of used cars traded last year was 2.65 million, 1.5 times more than new cars sold in the same year, according to the transport ministry.