Capital Rental Regulation Easing Stalled for Half a Year... Industry "Hopes for New Credit Finance Association Chairman's Leadership"

No Progress on Implementation Seven Months After Government's Regulatory Easing Announcement
Industry Voices Concerns Over Possible Policy Stalemate
"Uncertainty Over Failure" Worries Capital Companies
Association Pledges Active Support for

It has been seven months since the government announced its intention to review the relaxation of rental business limits for capital companies, but implementation has been slow, raising concerns within the industry. Industry stakeholders are urging the government to swiftly execute its policy, arguing that deregulation will allow them to secure new business opportunities—such as car subscriptions, regular rentals, and eco-friendly vehicle-specialized products—and strengthen their growth engines. Lee Dongcheol, the newly appointed Chairman of the Credit Finance Association, has also rolled up his sleeves, vowing to do his utmost to persuade financial authorities in order to push forward rental regulation easing.

According to the capital industry on the 19th, practical work has not progressed since the government announced at the end of November last year that it would review the relaxation of rental business limits for capital companies. Leading firms, such as Hyundai Capital, began preparing for new businesses in anticipation of deregulation, but as the policy’s progress has slowed, their concerns have deepened. The industry believes that deregulation would allow them to organically link automotive finance products, vehicle subscription and rental services, maintenance services like repairs and car washing, and payment services within their own applications.

Currently, under the regulations related to specialized credit finance businesses, capital firms are restricted so that the proportion of rental assets cannot exceed that of lease assets. As a result, capital companies have no choice but to focus their business portfolios on leasing. While they have the capability to enter the high-growth rental market, they are effectively blocked by regulatory barriers. If the government relaxes the regulations as announced, firms like Hyundai Capital and other capital companies are expected to expand their business areas with rental and subscription-based services connected to their core businesses.

An industry official stated, "Capital companies are restricted from expanding into long-term rental businesses due to the main business ratio limitation regulations, whereas large rental car companies are broadening their business areas to include not only rentals but also leasing without significant regulations." The official added, "If this regulatory gap is addressed, it will expand consumer choices and promote service innovation."

Amid this controversy over regulatory fairness, there is skepticism within the capital industry that the government may be hesitant to relax regulations due to the interests of large rental car companies. The recent rejection by the Fair Trade Commission of Affinity Equity Partners’ acquisition of Lotte Rental, which owns SK Rent-a-Car, also highlights the sensitivity surrounding the issue of market oligopoly in the rental car sector. The industry fears that, as seen previously when an application for innovative financial services in the insurance agency business was rejected following opposition from the insurance sector, new business initiatives may again lose momentum due to resistance from the rental car industry. As a result, calls are growing for financial authorities to expedite the relaxation of regulations on ancillary business activities.

Some are placing their hopes on the leadership of Chairman Lee, who took office as the 14th Chairman of the Credit Finance Association on the 16th. Chairman Lee has pledged to do his best not only to ease regulations for card companies but also for capital companies and new technology finance firms. Perhaps mindful of concerns about his lack of experience in public office as a "private sector" appointee, he plans to establish a system that proactively offers policy alternatives to regulators based on field experience and data. Easing regulations on ancillary rental business activities for capital companies is a key task for both Chairman Lee and the association, as well as a long-standing wish of the industry.

Chairman Lee emphasized, "We will support capital companies so they can provide customers with a one-stop service for various value-added products and services connected to their core businesses such as automotive finance," adding, "We must adapt to the reality where consumer behavior is rapidly shifting from ownership to experience, and from face-to-face to non-face-to-face channels."

This content was produced with the assistance of AI translation services.