Slowing economy creates opportunity for S. Korean used car sellers

South Korea’s used car sellers hope to take advantage of the slowing economic growth at home and abroad to expand their market shares.

Lotte Rental Co., the leading domestic car rental firm, has set up its first overseas secondhand vehicle sales unit in the United Arab Emirates (UAE) to ramp up exports while also planning to launch a business-to-customer (B2C) pre-owned car platform in October, according to industry sources in Seoul on Sunday.

K Car Co., Korea’s top used car retailer, is set to open its third auction house for secondhand vehicles in the second half of the year.

This comes as more customers shop for used cars than new ones amid an economic slowdown.

Korea’s new car registrations fell 10.4% to 819,742 units in the first half from a year earlier, while transactions of pre-owned vehicles dipped only 1.7% to 1.2 million units, according to Carisyou, a Seoul-based research firm.

LOTTE AUTO GLOBAL

Lotte Rental has been shipping used cars overseas since founding its secondhand vehicle brand Lotte Auto Global in 2019. Its used car export business has enjoyed a compound annual growth rate (CAGR) of 107.2% over the past five years.

Last week, the company set up Lotte Auto Global Middle East FZE in Dubai. The Middle East accounted for 90% of the roughly 4,600 used cars it exported last year.

Lotte Rental aims to expand its markets not only in the Middle East but also in North Africa and the Commonwealth of Independent States (CIS), a Eurasian intergovernmental organization formed after the breakup of the Soviet Union in 1991.

Lotte Rental will launch an online used-car B2C platform in October aiming to sell as many as 130,000 pre-owned vehicles and generate sales of 2.3 trillion won ($1.7 billion) by 2028.

OFFLINE AUCTION HOUSES

K Car is reportedly poised to open a third used car auction house in the country's southeastern Gyeongsang region.

The company now runs two auction houses: in Osan, 35 kilometers south of Seoul, and Sejong City, 120 km south, with display capacities of 1,200 and 600 vehicles, respectively.

K Car’s sales rose 16.5% to 589 billion won in the second quarter after enjoying record revenue of 604.4 billion won in the Jan-March period thanks to those auction houses.

Sales volume at those facilities, excluding used cars on consignment, grew 10.9% to 9,492 units during the April-June period.

The average successful bid rate at the K Car auction houses stood at about 80%, more than 20 percentage points higher than the average rate compiled by the Korea Auto Auction Association.

Write to Jung-Eun Shin at newyearis@hankyung.com
 
Jongwoo Cheon edited this article.