'K-used car' export market hits all-time monthly sales high of $761.4 million but still faces challenges ahead

Korea's used car exports reached a record $761.4 million last month, driven by demand from Central Asia and the Middle East. However, increased competition and calls for regulation raise concerns about industry standards and smaller exporters' fates.

Used cars are stored in Incheon [JOONGANG ILBO]

On Monday, the used car export complex near what used to be the Songdo Amusement Park in Yeonsu District, Incheon, was packed with vehicles.

Roughly 2,320 used car exporters — nearly half of the 4,854 such businesses nationwide — had displayed around 20,000 vehicles across a dirt lot spanning 500,000 square meters (about 123.5 acres), none bearing license plates. Vehicles marked “SOLD” were lined up for delivery, while trailers capable of carrying up to five cars at once kicked up dust as they shuttled the sold inventory to the port.

Riding a wave of enthusiasm for so-called “K-used cars,” the complex is seeing a new heyday.

According to the Korea International Trade Association, Korea’s used car exports hit an all-time monthly high last month, reaching $761.4 million — up 94.8 percent from $390.7 million of last year's April.

Buyers from Central Asia — especially Turkey and Kyrgyzstan — are snapping up cars to resell in Russia, with a growing preference for less-used, relatively new models, according to the CEO of a local used car trading company with 13 years of experience, surnamed Kim.

“SUVs from model years 2021 to 2022 with no accident history can sell for $30,000 to $40,000, which significantly boosts our revenue,” Kim said.

Rising sales to the Middle East also contributed to the growth.

Used cars are stored in Incheon on March 3, 2022 [YONHAP]

Used cars are stored in Incheon on March 3, 2022 [YONHAP]

Trade has become more active since the collapse of the Bashar al-Assad regime in Syria, which had tightly controlled international commerce. Last December, just 144 used cars were sold to Syria — but last month alone, that number surged to 3,084. Sales to Jordan and the United Arab Emirates also jumped, with 4,844 and 6,121 units sold last month, respectively, increases of 263 percent and 127 percent from the same month a year earlier.

Still, signs of unease are emerging among exporters as competition intensifies. Some foreign buyers who once relied on Korean partners to transport goods are now launching their own local businesses to directly purchase and export cars.

“At auctions in places like Anseong and Siheung in Gyeonggi, you can easily spot foreign buyers from Libya and Jordan,” said Park, a 38-year-old exporter with nine years of experience. “Some Korean exporters who lose out in the bidding may end up working as brokers for foreign firms.”

With Korea’s used car exports expanding rapidly, calls are growing for the industry to be regulated.

Currently, used car exports are considered an unregulated trade category, meaning there are no formal licensing or registration requirements. That has led to longstanding concerns about inconsistent quality, unclear fee structures and a lack of performance inspection standards.

Used car businesses in Incheon [JOONGANG ILBO]

Used cars are stored in Incheon [JOONGANG ILBO]

Democratic Party lawmaker Heo Jong-sik introduced a bill last month to amend the Automobile Management Act. The bill seeks to establish a registration system for used car exporters and develop dedicated export complexes.

But opinions within the industry are divided. While larger firms support the push for regulation and industry development, smaller operators worry they may not meet the registration requirements.

“Some midsize companies generate hundreds of billions of won in annual sales, but many smaller exporters make very little,” said Park Yeong-hwa, chair of the Korea Used Car Export Association. “Infrastructure is needed to boost competitiveness, but we must tread carefully to avoid harming small players.”

The absence of standards makes the industry vulnerable to accidents such as fires, and leads to inconsistent pricing and quality, according to Shin Hyun-do, head of the Korea Used Car Distribution Research Institute.

“If the industry is regulated, small businesses that can’t meet the criteria could form joint corporations and achieve economies of scale, making operations more efficient,” Shin said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY OH SAM-GWON [yoon.soyeon@joongang.co.kr]