KG eyes global used-car market through K Car acquisition

KG Group aims to transform K Car into a global used-car platform to boost exports of Korean vehicles to overseas markets.

The group also pledged to return 50 percent of the net profit generated by its listed affiliates to shareholders over the next five years to enhance shareholder value, though its stocks continue to underperform despite the broader rally in the Korean equity market.

“Korea has lots of good cars from not only KG Mobility but also from Hyundai Motor and Kia, and through K Car, we will be able to retail all those vehicles,” Kwak Jea-sun, the chairman of KG Group, said at a press conference in Yeouido, western Seoul, on Tuesday.

“K Car could help establish a global used-car business model, and this approach could be particularly useful in countries with lower levels of economic development than Korea,” he added, describing the endeavor as a “new frontier.”

KG Steel, a steel-making subsidiary under KG Group, inked an agreement to acquire roughly 72.2 percent of K Car, the country’s largest secondhand car platform by number of directly operated outlets, from Hahn & Company. 

Founded in 2000 as SK Encar by SK Group, K Car rapidly gained market share by introducing a direct-sales model to Korea’s used-car market, which had long been plagued by fraudulent listings and was often described as a “lemon market.” 

Operating 48 outlets nationwide, K Car generated about 2.5 trillion won ($1.65 billion) in revenue last year.

KG plans to combine K Car’s operations with the manufacturing capabilities of KG Mobility as well as its payment and fintech affiliates, KG Inicis and KG Financial, to build a full automotive value chain spanning new-vehicle manufacturing, used-car distribution, auto financing and payments.

KG Mobility is already an export-driven automaker with exports accounting for 64 percent of total sales, with most of its overseas shipments are concentrated in Turkey and Eastern Europe.

The company plans to begin operating a plant in Vietnam with an annual capacity of up to 15,000 vehicles in September through a partnership with local conglomerate FUTA Group. In Saudi Arabia, local production of the Musso pickup truck is scheduled to begin in the second half of the year. 

KG Mobility is also working with Indonesia’s state-owned defense company Pindad on military vehicle development and broader automotive projects.

KG Mobility is slated to launch the SE10 plug-in hybrid EV as a strategic global model for launch next year, targeting worldwide sales of 60,000 units. The company aims to sell 200,000 vehicles annually and generate more than 10 trillion won in revenue by 2030.

BY SARAH CHEA   [chea.sarah@joongang.co.kr]