Opposition to Deregulation of Financial Companies’ Car Rental Operations... Threat to Survival of Small Businesses

Financial Firms Hold Over 44% Market Share

The Korea Rent-a-Car Business Association announced on July 14 that it had submitted an opinion letter opposing the easing of limits on financial companies' car rental operations (core business ratio). The Association argues that since financial companies already have significant market dominance, further deregulation could threaten the survival of small and medium-sized rent-a-car businesses.

SK Rent-a-Car promotional image. Not related to the article content. The Asia Business Daily DB

According to the Association, out of approximately 1,000 total rent-a-car operators, 17 financial companies account for about 44% of the market. The number of vehicles registered to financial companies also increased by 33% as of the end of May this year compared to the end of 2021, already surpassing the 7.5% increase recorded by dedicated rent-a-car companies during the same period.

The Association also stated that deregulation could negatively impact consumers. "Small and medium-sized rent-a-car companies have been providing long-term transportation options to low-credit and economically disadvantaged consumers who are not approved through financial companies' credit evaluations," the Association explained. It expressed concern that if these smaller operators are pushed out of the market, this demographic's mobility rights could be curtailed.

The Association further pointed out the issue of bundled sales utilizing affiliated financial companies. It said, "Financial groups that own card, capital, banking, and insurance businesses can offer bundled packages combining car rental and financial products, whereas dedicated rent-a-car operators find it difficult to compete with this." The Association added, "If the core business ratio is relaxed, the market dominance of financial companies will grow even stronger."

It also emphasized, "The core business of financial companies is not running rent-a-car operations. Allowing financial capital to encroach on labor-intensive physical service industries such as car washing, dispatch, and accident replacement rentals is inconsistent with the government’s policy direction for productive finance."

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