August 19, 2015 12:21
The used car market in Korea, notorious for scams and lemons, is undergoing major improvements as big companies move in and the Internet opens new roads.
The usual sales method of visiting used car lots to strike deals are quickly being replaced by a one-stop system, where people wishing to sell their car simply call a dealer and have it appraised at home.
Another way is to post photos of the car online and have used car dealers place bids.
SK Group was the first to foray into the market by launching SK Encar back in 2000. Now, SK Encar controls 40 percent of the used car market here. Last year, Lotte Group and Hyundai Motor also opened their own second-hand dealerships.
Kim Yong-geun of the Korea Automobile Manufacturers Association said, "As conglomerates jump into the used car market, the number of deals between individuals has declined, while deals through big companies have increased."
Last year, 61 percent of all used car deals were done through big businesses.
Conglomerates are jumping into the action because the market is growing rapidly. According to the Ministry of Land, Infrastructure and Transport, 3.46 million used cars were bought and sold last year, up 76.5 percent compared to 2009.
New car purchases grew just 12.8 percent to 1.67 million cars.
Industry watchers believe the second-hand car market will be worth W33 trillion by 2020 (US$1=W1,185).
Foreign carmakers are also getting into the market.
BMW Korea began its own used car business in 2005 under the brand name "BMW Premium Selection," while Mercedes-Benz Korea launched the "Star Class" used car service in 2011.
Choi Duk-jun at Mercedes-Benz said, "We plan to expand the number of our used car dealership stores from four to seven, and the number of used Mercedes sales is expected to double from last year to 1,200."
Jaguar Land Rover Korea also opened a used car dealership in August last year and hopes to boost the number of stores to three by early 2017. Volvo Korea and Volkswagen also want to open their own second-hand dealerships this year.
Although their market shares are small, venture companies are increasing their presence in the market with car-trading smartphone apps. Park Hong-kyu at SK Encar said, "At present, there are as many as 400 such apps available for Android smartphones, and the mobile market for used cars is expected to grow rapidly."
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