(1) Reasons for Proposal

The Motor Vehicle Management Act was amended (promulgated by Act No. 6730, Oct. 24, 2017, and to be enforced Jan. 1, 2019) to introduce a motor vehicle exchange and refund system where a dispute arising from a new motor vehicle with a defect between the manufacturer and owner of the motor vehicle can be arbitrated for settlement.

Accordingly, this Amendment aims to prescribe matters legally delegated and things necessary for the enforcement thereof such as the requirements for exchange and refund, method for requesting arbitration of exchange and refund, guidelines for refund, etc.

(2) Major Provisions

A. Prescribe matters related to committees and the scope of submission of materials in accordance with the Amendment to the Act (Articles 45 and 52)

Abolish the provisions of the motor vehicle manufacturing defects examination and evaluation committee that duplicates the work by the committee prescribed by the Act

Clearly obligate manufacturers, etc. to include information data related to a notification of significant defect recurrence in the technical information data submitted to the Minister of Land, Infrastructure and Transport, thereby ensuring that the government may recognize such fact and specially manage it to prevent manufacturing defects

B. Prescribe matters related to a written contract including quality assurance (Article 98-2)

Prescribe terms and conditions to be included in a written contract between a manufacturer and purchaser on a new motor vehicle transaction such as the content and scope of quality assurance, total sales price, delivery date, etc.

Require a manufacturer who accepts arbitration provisions to explain the gist thereof to, and seek understanding and consent from, a purchaser, thereby minimizing confusion

C. Make a distinction between significant defects and moderate defects (Article 98-3)

Define significant defects as defects that occur as to structures and devices related to driving safety such as motors, power transmission devices, braking, adjusting and steering devices, etc., thereby distinguishing them from moderate ones

D. Notify the recurrence of defects (Article 98-4)

Specify forms and methods, etc., that an owner of defective motor vehicle is required to use when he/she notifies the manufacturer, etc., of defect recurrence so that the manufacturer can have the opportunity to effectively repair the defects that recur, thereby eliminating motor vehicle defects in the early stages

E. Prescribe matters regarding requests for exchange, refund and arbitration (Articles 98-5 and 98-6)

Specify detailed provisions such as forms and documentary evidence related to requests for arbitration, procedures for manufacturers, etc., or motor vehicle owners to accept arbitration provisions, etc.

F. Prescribe matters as to fact-checking by a performance test agent (Article 98-7)

Specify the facts to be checked by a performance test agent when it is difficult to judge the existence of defects in the process of arbitration deliberation, deadline for submission of the examination, etc., thereby promoting the expertise and fairness of the arbitration deliberation

G. Prescribe matters regarding the calculation of refund value (Article 98-8)

Prescribe the effective calculation of refund value by adding necessary costs to, and deducting benefits as much as mileage from, total sales price, and require the accidents unrelated to motor vehicle defects to be sorted out by the arbitration department