Regional price differential of car - Overcharged auto prices
Febuary 2nd, 2008 WeeMee
Oil price reached their peak currently.
South Korea's Fair Trade Commission (FTC), which has been investigating importers of foreign-made cars for setting prices excessively high, is now expanding the probe into allegations of price-fixing and other unfair business activities. It draws attention whether the crackdown could finally bring an end to the controversy over the high prices of imported automobiles in the country, as the commission carries out an extensive on-site investigation.
Domestic car companys have 95 percent shares in the korean domestic automobile market.
The South Korean car market has been dominated by local makers such as Hyundai, Kia, Renault Samsung and GM Daewoo, however, foreign cars have been steadily increasing their portions. For the first 10 months of this year, sales of imported cars rose 32 percent to 43,492 units, according to data by the Korea Automobile Importers and Distributors Association. Since domestic automakers generally maintain or raise prices of their existing models which are upgraded fully or partly, it looks extraordinary that the carmakers have down-adjusted their prices without any apparent reasons.
But, domestic car prices still have a competitive prices. The Korean branches of foreign carmakers and their official dealers have been blamed for setting the car price much higher than in other countries and pocketing the profits. Meticulous design regulations by the government and a number of different taxes and tariffs are another reason that push up the imported car prices. For example, Lexus' LS600hl sedan is sold at $207,000 in Korea including tax. But in America, a full-option model is reported to be around $126,000.
As consumers' complaints increased and the market size expanded, the government began to look into the foreign car market more scrupulously. Imported cars with price tags less than $54,000 have expanded their foothold here over the past three years, with high-priced, premium models experiencing reduced market share.
The National Tax Service and Korea Customs Service launched tax audits on imported car dealers, as well as Toyota's Korea unit. They are suspected of evading tax by reporting their car prices lower than the actual sales prices. Domestic automakers competitively lowering prices. Imports of cars must shift to low price segments, too.Back
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