Major dealerships expand used car business for next cash cow

Actor Lim Ji-yeon poses with a Mercedes-Maybach S 580 luxury vehicle at Han Sung Motor’s Cheongdam showroom in Seoul, July 7. Courtesy of Han Sung Motor

Korea’s major dealerships for imported luxury auto brands are tapping deeper into the used car market as they look for new, reliable sources of revenue.

The shift is seen as inevitable for sustainable growth, as most dealerships for top German and other luxury brands, including Mercedes-Benz and BMW, face steep declines in profitability.

Han Sung Motor, one of the nation’s most influential dealerships and a key distributor for Mercedes-Benz Korea, runs a total of nine certified used car showrooms across the nation. The old glory of the dealership, however, is fading away with drastic earnings falls in recent years.

Han Sung Motor reported an operating loss of 70.6 billion won ($50 million) in 2024. The loss almost doubled from the previous year.

Starting this year, the dealership is expanding promotional campaigns for its used car business in a desperate bid to reverse its earnings slump. The company launched a used car refund program for its customers, enabling them to get a full refund within five days of purchase of one of the firm’s certified Mercedes-Benz vehicles. No other dealerships offer similar services.

The decision is aimed at boosting sales of secondhand vehicles amid sluggish growth in the nation’s new vehicle market.

According to data from market tracker CarIsYou, the number of Korea’s new vehicle sales reached some 1.63 million last year, down 6.5 percent from the previous year. However, used car sales came in at 2.34 million, a slight decrease of 0.7 percent during the same period.

Kolon Mobility Group's new brand logo for 702 / Courtesy of Kolon Mobility Group

Kolon Mobility Group, which distributes BMW, Audi, Volvo and other imported brands in Korea, has also recently launched a new online used car sales platform, called 702 Kolon Certified Used Car.

The website sells imported used cars certified by the dealership. It also offers diverse after-sales services and runs warranty programs to increase the reliability of used vehicles, according to the company.

Kolon Mobility Group is also tasked with recovering its earnings on time, after the firm reported a steep operating profit fall of 50 percent last year, compared to a year earlier.

Industry officials said demand for used cars is gradually rising as more customers seek to purchase price-competitive vehicles.

“The once-prevalent negative perception of used cars is rapidly fading away, as customers can get access to detailed information on the specific condition of secondhand vehicles before they purchase them,” an official from the auto industry said. “More dealerships will expand their business for used cars, as it is less vulnerable to any external economic risks.”