0926-Demand for secondhand imported brands increasing

By Kim Tae-jong
Jung Hak-jong, a 42-year-old office worker, recently learned that he was deceived by a secondhand car dealer. He was told that his Honda CR-V SUV was accident-free when he bought it in June, but discovered that the vehicle had been in a major wreck.

“My dealer gave me a clean car history report as proof that the vehicle was accident-free,” he said. “But when I visited a car repair shop for maintenance services, they said my car had an accident-related damage.”

Furious, he demanded a refund for the vehicle but all he got were excuses. He later filed a complaint with the Korea Consumer Agency (KCA).

The secondhand car market has been growing fast, but loose regulations have produced a number of victims like Jung.

According to the Ministry of Land, Infrastructure and Transport, the local used car market is estimated at 22 trillion won with 3.2 million used cars traded last year, more than double the 1.5 million new vehicles sold in the year.

But KCA said the number of complaints related to secondhand vehicles has been on the increase, recording 11,083 in 2010, 12,940 in 2011 and 10,564 in 2012.

But less than half of them were properly compensated. For example, about 38 percent of all customers who filed complaints were compensated in July, the agency said.

Most complaints involve fake car history reports that miss accident-related records or have forged mileages. Flood-damaged cars are also sold without revealing repair records.

Dealers also advertise very attractive vehicles online to lure customers and try to sell other vehicles.

“I found a very good car online and made a reservation,” said Lee Kyung-joo, a 25-year-old office worker. “But when I visited the dealer, he showed me a different vehicle, saying the one I chose had been sold. Later, I realized that it was a kind of bait to lure customers.”

Gov’t’s new measures

Experts pointed out that the lack of a transparent trading system victimizes customers and also is a major obstacle against the growth of the market.

“The biggest problem is that customers are not fully provided with necessary and reliable information,” said Kim Pil-soo, an automotive studies professor at Daelim College. “The consequence is that customers are often ripped off.”

He urged that the authorities should make more of an effort to establish a system in which customers can check car history, including repair records.

The government recently announced that it has revised a law regarding car history reports to prevent breaches in oral agreements made in good faith, and unfair omissions of material facts by used car dealers.

Under the new regulation, dealers, mechanics and car scrapping service providers are required to send key information to the transport ministry, which will be available to secondhand car buyers.  

“Buyers were able to only judge a used car by inspecting its mechanical condition and maybe leafing through the dealer's or owner’s file of service records,” an official from the ministry said. “But such information was often unreliable.”

But thanks to the improved record collection system, buyers can check reliable vehicle history reports at www.ecar.go.kr with a vehicle identification number and the approval of an original owner or dealer, he said.

Some of the key information available at the site includes repair records, related safety features and mileage.

Growing market

Despite various problems, the local secondhand car market is growing with the rising presence of imported car brands. Industry insiders said that buyers want to enjoy driving premium vehicles at affordable prices.

“As sales of vehicles from imported brands are increasing, the sales of secondhand imported cars are also soaring,” said Kim Kyeong-mi, an official from SK Encar, the nation’s largest used car dealer.

She said used imported cars are much more affordable due to their high depreciation rates.

“Many drivers choose imported used cars as their depreciation rates are bigger than local ones, translating into a better deal for potential buyers,” she said.

Best-selling models in the secondhand markets are Hyundai Motor’s Grandeur, Sonata and Avante and diesel-powered sedans from luxury imported brands such as BMW 3 and 5 Series and Mercedes-Benz E-Class, she said.

With increasing growth potential, some carmakers such as BMW and Mercedes-Benz have also jumped into the used car market directly.

BMW Korea, the leading imported brand here, started to sell used cars from 2005, expanding its premium services and sales volume under the name of BMW Premium Selection.

Mercedes-Benz Korea also runs the StarClass program in which the automaker guarantees the quality of used cars through thorough inspections.

Tips for purchase

When shopping for a used car, consumers are concerned that they could be deceived or ripped off. But experts say there are a few simple steps that can help customers avoid being tricked.

1. Do your research

First, decide how much you can afford to spend, including registration, insurance and regular maintenance and running costs. Then, have a thorough look at what’s out there before buying a used car. It’s important to get an idea of a model’s current market price.

2. Choose best car

If you find a used car where the price is much lower than the market, there should be a reason. If something seems too good to be true, it probably is. Experts suggest that the best purchase would be a vehicle less than three years old with clean vehicle history report.

3. Check the car’s history

If you find a car you like, you need to check a vehicle history report first, which is available at various organizations’ websites such as online used car companies, the transport ministry at www.ecar.go.kr and the Korea Insurance Development Institute. You should check the history of the car to make sure it’s not stolen, encumbered by an outstanding loan, or severely damaged in a car accident or flood.

4. Examine the car

Take a printout or copy of the seller’s advertisement with you to check that details like the odometer numbers are accurate. It is necessary to test drive the car but also make sure you have a thorough look over the car yourself, and best of all, have an independent mechanic or automotive center check it out properly on a hoist.

5. Paperwork

Make sure all the paperwork is in order, and that you have original versions such as registration papers, service history and logbook. It needs extra caution if a seller and owner of the vehicle is different. In that case, you have to check a letter of attorney.