Used car rentals and certified used car sale rise in Korean auto industry

[Photo provided by LOTTE Rental]

The used car market in South Korea, where 3.8 million units are sold every year, is on the rise as demand increases among large companies seeking to expand the scope of their mobility business. They are looking for opportunities beyond the new car market that saw 1.68 million registered vehicles last year, a figure less than half of that of used cars.

According to the automotive industry on Sunday, LOTTE Rental Co., the top player in the Korean car rental market with a 21.4 percent of the market in the fourth quarter, will start a used car rental business in the second half of this year. Unlike new car rentals that generally offer a rental period of more than two years, the used car rental business will target the demand for short and medium-term rentals with a duration of less than two years.

LOTTE Rental plans to secure about 50,000 used cars for rental by 2025 to significantly increase the share of new and used car rental businesses’ operating profit to as much as 75 percent from 41 percent by 2025. LOTTE Rental also predicts an annual average of 35 percent increase in rental operating profit for the next three years.

SK Rent A Car Co., the industry’s No. 2 player engaged in used car rentals and sales, is confident about the growth in both businesses. Late last year, the company launched a “use and buy” program, which allows consumers to buy a rental vehicle at a desired time after using the rental service.

Under the program, consumers need not wait until the rental expires. It also offers a database with a two-level security technology in the form of a quick response code to prevent any forgery or alteration of accident history, mileage and ownership change in an attempt to resell cars after acquiring a rental car.

“Sales of new and used car rental businesses increased 14 percent in the first quarter from a year ago,” said an unnamed official from SK Rent A Car. “Used car prices also seem to have bottomed out late last year.”

Selling certified used cars is the industry’s another focus area in the second half of this year with Hyundai Motor Group jumping into the business.

Hyundai Motor Co. and Kia Corp. will purchase their own brand vehicles that have fewer than 100,000 kilometers in mileage of less than five years and selectively sell those after over 200 quality inspections. Hyundai Motor will establish a high-tech center for certified used cars in Yangsan, South Gyeongsang Province, and create an integrated information portal for used cars.

Kia also plans to create a reconditioning center for certified used cars. Certified used car sales are also aimed at gearing up for the rise in future demand for used electric cars.

Even car importers are joining the trend. Last month, Toyota Motor Korea Co. released “Toyota Certified,” a certified used car brand. It sells official imports of Toyota Motor Korea that are accident-free, less than five years old, have less than 100,000 kilometers and have passed 191 technical and quality inspections conducted by an authorized service center.