Used Car Dealer and Car Rental Business Registration in Korea

How do a car dealership and a car rental business differ, and is registration required?

A motor vehicle trading business is one of the motor vehicle management businesses under the Motor Vehicle Management Act and must be registered with the head of the si/gun/gu (the same applies to changing registered matters). A motor vehicle rental business (rent-a-car) must prepare a business plan and register with the si/do governor under the Passenger Transport Service Act. Operating either business without registration is a criminal offense, so first determine which type of business applies.

What are the registration requirements for a motor vehicle trading business?

(1) Display facilities: the total floor area must be at least 660 square meters; where three or more dealers jointly use premises at the same place, the area standard applied to each dealer (660㎡) may be relaxed by up to 30%.

(2) Office: the office must adjoin the display facilities or be in the same building (if certain conditions are met, it may be in a building within a 100-meter radius of the boundary of the display facilities).

(3) Structure: in autonomous districts with a population of 500,000 or more in a special city or metropolitan city, a structural standard applies so that vehicles cannot be seen from outside the display facilities (unless the head of the gu finds it unnecessary).

(4) Ordinances: other necessary standards may be set by ordinance of the si/do or of a city with a population of 500,000 or more.

(5) Disqualifications: persons under adult or limited guardianship, persons declared bankrupt and not reinstated, persons whose registration was cancelled less than 1 year ago, and persons for whom less than 2 years have passed since completing a prison sentence for violating this Act, among others, may not run the business; for a corporation, this also applies to its officers.

What are the registration requirements for a motor vehicle rental business?

(1) Minimum number of vehicles: at least 50 if the business area is nationwide; if the main office, branch offices and reservation offices are all in one local government and the business operates only there, the number set by that local government's ordinance within a range of fewer than 50.

(2) Garage: an area equal to each vehicle's length multiplied by its width, or the number of parking spaces under the Enforcement Rule of the Parking Lot Act, for every vehicle held; in principle the garage must be owned by the operator (with exceptions such as a use permit for land managed by the State or a local government).

(3) Office: office equipment and communication facilities needed to manage revenue and vehicle dispatch (not required for branch and reservation offices with unmanned reservation, dispatch and payment systems).

(4) Disqualifications: the disqualifications for passenger transport businesses apply mutatis mutandis.

Which documents are needed for registration?

For a motor vehicle trading business, attach a location map and floor plan of the premises and a business plan (including required funds and staffing plans) to the motor vehicle management business registration application and submit it to the head of the si/gun/gu. For a motor vehicle rental business, attach a business plan, a statement of the business vehicles held or a vehicle purchase contract, and proof of ownership or use rights over the garage site to the motor vehicle rental business registration application; if a reservation office is set up, a parking lot use confirmation or similar document is added. The corporate register is checked through shared administrative information.

What is the registration procedure?

Motor vehicle trading: (1) secure premises and display facilities → (2) submit the registration application → (3) the head of the si/gun/gu reviews compliance with the registration standards (if needed, sets a period to secure facilities and notifies you to submit documents; the period is up to 12 months) → (4) entry in the registration ledger and issuance of the motor vehicle management business registration certificate. Motor vehicle rental: (1) prepare the business plan and meet the registration standards → (2) submit the registration application → (3) the registration requirements are checked → (4) issuance of the motor vehicle rental business registration certificate (if the number of vehicles was confirmed by purchase contracts, the vehicles must be registered within 30 days of issuance).

How long does registration take?

The processing period on the application forms is 15 days for the motor vehicle management business registration application and 20 days for the motor vehicle rental business registration application. Time needed to secure facilities is separate.

Which authority receives the registration?

For a motor vehicle trading business, the head of the si/gun/gu where the premises are located; for a motor vehicle rental business, the si/do governor (the competent authority). For the trading business registration standards set by ordinance, check the ordinance of the local government where the premises are located.

Why is a registration rejected or supplementation requested?

Typical reasons are failing to meet registration standards such as display facilities, garage or number of vehicles, falling under a disqualification, and not submitting documents proving use rights. For a motor vehicle trading business, registration may be refused if the standards are not met, restrictions on registration in the public interest apply, a disqualification applies, documents are not submitted within the period set to secure facilities, or other laws restrict it. Running a motor vehicle management business without registration can lead to imprisonment of up to 3 years or a fine of up to KRW 30 million, and running a motor vehicle rental business without registration can lead to imprisonment of up to 2 years or a fine of up to KRW 20 million.

What can an administrative agent help with?

YouSun Administrative Agency prepares the registration application and attachments such as the business plan, reviews the requirements, and submits them to the authority on your authorization. Vehicle performance and condition inspections, vehicle registration and transfer agency (the statutory agency scope of the relevant trade), and tax or accounting work are not handled. Work restricted by other laws cannot be handled, and litigation or court representation is outside the scope of an administrative agent and is not offered. Whether registration is granted is decided by the competent authority.