The South Korean government ordered Hyundai Motor Co. and its affiliate Kia Corp. to delay their plans to enter the used car market by a year to minimize the impact on existing players.
Secondhand automobile sales were not designated as one of the "livelihood businesses" that must be reserved for small firms and startups by the Ministry of SMEs and Startups in March, allowing multinationals such as Hyundai Motor Group to enter the market.
Used car dealer associations around the country were outraged by the decision.
According to a statement from the ministry, the government has organized multiple meetings between Hyundai Motor Group and representatives from the groups to close gaps between them.
However, they were unable to reach an agreement, and the ministry imposed mandatory mediation.
According to the statement, the ministry ordered Hyundai and Kia to start selling used automobiles in May of next year after a four-month test period during which they are authorized to sell less than 5,000 high-quality and certified used cars, respectively.
In addition, the government has set a two-year cap on the number of used automobiles that carmakers can sell, from May 2023 to April 2025.
From May 2023 to April 2024, Hyundai will be authorized to handle 2.9 percent of all used automobile transactions in the country, rising to 4.1 percent the following year. During the same period, Kia's similar figures are allowed to be 2.1 percent and 2.9 percent, respectively.
Hyundai and Kia are required to buy used cars from consumers who intend to purchase new vehicles with their brand badges.
They must also auction off their brand-new cars that have been on the road for more than five years and have driven more than 100,000 kilometers, with current small players participating.