The used car market has established itself as a major domestic industry, with approximately 2.5 million units traded annually and 880,000 units exported in 2023 alone. However, a lack of trust and unfair practices have long been pointed out as persistent issues.

According to the Korea Consumer Agency, 80% of consumer complaints related to used cars stem from deficiencies in the 'Performance and Condition Inspection Record.' In particular, since the introduction of performance insurance in 2019, a structure has taken root where dealers and inspectors rely solely on insurance for defect repair responsibilities. As a result, insurance premiums borne by consumers have increased 2.2 times over five years. Currently, the operating expense ratio of performance insurance stands at 44%, a significantly higher level compared to general auto insurance (16%).

To address these issues, the Ministry of Land, Infrastructure and Transport (MOLIT) finalized and announced the 'Used Car Consumer Protection Measures' at the 12th National Policy Coordination Meeting presided over by the Prime Minister on the 6th.

Strengthening Dealer Responsibility and Easing Refund Criteria The core of these measures is to clearly impose defect warranty responsibilities on used car dealers. The system will be overhauled to transition the existing performance insurance—previously subscribed to by inspectors—into a mandatory insurance for dealers. It will expand the coverage period and items while lowering the premium burden. Although the broader coverage may lead to higher premiums for some insurance products, MOLIT is reviewing a plan to exclude items covered by manufacturer warranties from the insurance coverage.

To reduce consumer damage, refund criteria will also be significantly eased. If defects occur in major devices such as the engine within seven days of vehicle delivery, contract cancellation will be permitted if the repair cost is at least 3 million won and 30% or more of the purchase price, or if the repair period exceeds 30 days. Previously, consumers had to meet both conditions, but going forward, meeting just one will be sufficient to cancel the contract.

Mandatory Total Price Display and New Platform Regulations The price display method will also be improved to be more consumer-friendly. When advertising used cars on online platforms in the future, the total price—including not only the vehicle price but also all costs that consumers actually have to pay, such as management fees and insurance premiums—must be clearly stated. This measure aims to reduce the confusion consumers experience when additional fees are added at the contract stage.

New regulations will also be established for 'sell-my-car' platforms, which have seen a surge in usage recently. If platform diagnostic errors cause losses to dealers or vehicle owners, compensation standards matching the actual damage amount must be established. Platforms will also be prohibited from restricting service usage for reasons not attributable to the user. Additionally, grounds for imposing surcharges on platform operators will be newly established, and administrative disposition authority will be expanded from local government heads to the Minister of Land, Infrastructure and Transport.

Overhaul of Inspection Records and Disclosure of Reliability Information To improve inspection quality, the format of the Performance and Condition Inspection Record will be overhauled to reflect reality, and detailed inspection standards will be established. If inspection errors occur in major items such as flood or accident history, strong administrative actions, including business suspension, can be taken regardless of intent. A leniency program for voluntary reporting will also be introduced to prevent collusion between dealers and inspectors.

Furthermore, to expand consumer choice, reliability information such as the defect occurrence rate and insurance loss ratio of dealers and inspectors will be disclosed annually. Based on this, there are plans to designate outstanding businesses.

MOLIT plans to propose legislative amendments by this September and form a separate task force (TF) for detailed discussions.

A MOLIT official stated, "The total cost display system can be implemented simply by revising subordinate statutes, but legal amendments are required for the remaining tasks. We aim to pass the National Assembly within this year, and actual implementation will likely be in the second half of next year."

Minister of Land, Infrastructure and Transport Park Sang-woo emphasized, "Both consumers and diligent industry workers have suffered due to the opacity and unfair practices in the used car market. We will work to create a fair and transparent used car market."