Car importers cut prices after probe announcement

BMW’s new 3-series 320d slashed by nearly 2.8 million won


European carmakers, which enjoy the largest share of Korea’s import car market, have slashed their prices as the nation’s antitrust regulator launched an investigation into alleged overpricing and unfair business practices.

BMW, the largest player here with 25 percent of the import market, rolled out the latest version of its flagship 3-series, the 320d diesel, on Thursday in the 45 million won to 56.5 million won range, down about 2.8 million won from its previous model sold for 48.2 million won to 54.3 million won. 

Swedish carmaker Volvo introduced the diesel variants of its S60 and S80 on Wednesday at a price 10 million won lower than its London tags.

Both launches came days after the Fair Trade Commission sent official notification to four major car importers ― Mercedes-Benz Korea, BMW Group Korea, Audi Volkswagen Korea and Toyota Motor Korea ― that it will investigate their pricing systems for alleged overcharges.

Foreign brands, especially German brands, have been subject to complaints that the cars they bring in are on average about 30 percent more expensive than they are abroad, which didn’t change even after the Korea-EU trade pact brought down tariffs for them starting in July.

BMW, explaining the price cut, said the slash was possible since it increasingly achieved economies of scale by retaining the top market share among importers.

“We were able to bring the price down a little as we sold more. We are fully cooperating with the antitrust regulator’s investigation,” BMW Korea CEO Kim Hyo-joon told reporters at the launching ceremony for the 320d diesel Wednesday.

Defying accusations that BMW overcharges in Korea, Kim referred to an analysis by its adviser KPMG to say that its parts are sold at a fair price.

“Our components are sold 12 percent more expensive here than in Germany, but it is 7 percent and 38 percent cheaper than our products in the U.S. and China, respectively,” Kim added.

The tariff cut for European importers of cars bigger than 1,500 cc sizes were slashed from 8 percent to 4.5 percent, but only a few models have had price cuts since then.

High repair costs are also subject to inspection. Korea Insurance Development Institute says components of import cars were up to 6.3 times more expensive than those of domestic brands.

“The cut can be attributed to the ongoing investigation, but it has also got to do with fierce competition to up the market share,” Yoon Dae-sung, an executive at the Korea Automobile Importers and Distributors Association said. Competition for the Volvo S60 is mainly from the German diesel equivalent of the BMW 3-Series and the Audi A4.

The Volkswagen Scirocco R, the new variant of its 3-door coupe, was launched earlier this month at 42.2 million won, which sits significantly lower than the sales price in Germany, 60 million won.

By Cynthia J. Kim (cynthiak@heraldcorp.com)