“Aiming for the 30兆 market” Carrot introduces a pilot service for ‘certified increased vehicles’ diagnosed by a diagnostic evaluator

Resolving information imbalance by disclosing ‘photos taken by appraisers and repair history’ of used cars for sale
Pilot introduction centered on Seoul and Gyeonggi region; formal service introduction not yet determined
Following automakers, rental car companies are entering the used car market, with competition expected to heat up

Carrot, Korea’s leading local life app, collaborated with local repair shops last year to enable diagnostic appraisers to accompany the used car purchase process, and then pilot-introduced a certified used car service that directly inspects properties for sale. It is expected that market share can be expanded by resolving the information imbalance in the used car market, which is considered a ‘lemon market.’ However, given that automakers such as Hyundai Motors and Kia entered the used car market last year, competition is expected to become more intense.

A diagnostic appraiser from Carrot directly inspects properties, and ‘minimizing consumer inconvenience’ is the key

According to the industry on the 15th, Carrot recently launched the ‘Carrot Diagnosis Used Car’ service mainly in the Seoul and Gyeonggi regions. Carrot Diagnostic Used Cars, available on a separate page within the platform, are used car listings from private sellers that have been inspected by a Carrot car diagnostic appraiser. For used car listings that have been diagnosed, the insurance accident handling history, repair history, status of consumables and options, and interior and exterior photos taken by the appraiser are disclosed.

It is currently in the pilot service phase and anyone can use it for free. According to a Carrot official, the company is currently conducting an experiment to provide a vehicle diagnostic service directly through its used car direct transaction service, and whether or not to officially introduce the service has not yet been decided. In addition, we plan to establish warranty regulations for diagnostic products in the future.

A Carrot official said, “We are working to resolve the information imbalance in the used car market and create a transaction environment where both sellers and buyers can trust and communicate,” adding, “We will continue to advance technology and collaborate with various professional services to improve the level of technology that consumers may face.” “We will minimize inconvenience and improve the market user experience.”

Carrot, which started a direct personal used car transaction service in 2021, has increased the daily used car transaction volume to an average of 2 units over the past two years. This is 400% of the average daily transaction volume (about 6,500 units) in the domestic used car market, and it is expected that market share will increase rapidly with the introduction of this pilot service. An official in the used car industry said, “From the perspective of an individual consumer who lacks expertise, the biggest barrier to entry into used car trading is inspection of the vehicle. Carrot, which has already secured an overwhelming number of platform users, lowers the anxiety factor of direct transactions through direct certification and inspection. “If we expand our services, our share in the used car sales market is likely to increase significantly,” he said.

The used car market far exceeds the number of new car sales, and car manufacturers are also entering the market in earnest

However, there is also a negative outlook that it will be difficult for Carrot to increase its used car market share. This is because, following car manufacturers, even rental car companies are jumping into the used car market.

Representative companies are Hyundai Motors and Kia. Hyundai Motor Company, which has been preparing for the certified used car business step by step, starting with registration as a used car sales business in January 2022, became the first domestic automobile brand to start selling certified used cars in October last year. Hyundai Motor Company’s vehicle supply is carried out through its own infrastructure throughout all processes of the used car business, from used car acquisition to commercialization, logistics, and sales. In particular, it is characterized by the fact that only products that have passed more than 1 diagnostic and testing items, the most in Korea, are sold.

Following Hyundai Motors, Kia also entered the used car market in November last year. Unlike Hyundai Motors, Kia appears to be focusing on electric vehicle (EV) transactions. To this end, the country’s first electric vehicle quality rating system was introduced to verify batteries, which are a key factor in determining the price of electric vehicles. In addition, KG Mobility is also preparing a certified used car business to purchase and sell vehicles that are five years old and have less than 11 km of mileage. We plan to prepare our own infrastructure and enter the market as early as this year.

The reason the automobile industry is entering the used car market is because the used car market has a high potential for growth. Last year, the annual number of used cars traded was 238 million units, which exceeds the number of new cars sold (180 million units) and the number of registered rental cars (120 million units). Assuming that the average selling price of a used car is in the mid to high 1 million won range, the market size approaches 1,000 trillion won.

In addition, there is analysis that the company has entered the used car market for the purpose of facilitating new car sales. Kim Pil-soo, Professor of Automotive Engineering at Daelim University, said, “The reason Hyundai Motor Company is trying to enter the used car market may be a new business model that makes money, and there are various reasons, but above all, it is because of the recycling effect between new and used cars.” He added, “When used car prices fall, new car prices fall. “Because it affects sales volume, automakers directly manage used cars and maintain prices, which leads to smooth sales of new cars,” he analyzed.