Imported car parts that are sold in South Korea can be up to 250% more expensive as the same parts sold overseas, a study found. In addition, the price of imported car parts is as much as seven times the price of equivalent parts for South Korean cars, indicating that the price bubble for imported car parts remains as big as ever.
With funding from the Fair Trade Commission, Consumers Korea (CK), a consumer advocacy organization, conducted a study of six car parts that are frequently repaired and replaced for the five brands of imported cars that have the biggest share of the South Korean market: BMW, Mercedes-Benz, Audi, Lexus, and Chrysler.
The study found that, for 23 of the 30 total parts, the average price in South Korea was higher than the price overseas. There were also six parts for which the domestic price was more than 150% of the overseas price.
The average price in South Korea for the front fender on the Japanese Lexus (300h) was 691,000 won (not including VAT), which was 2.5 times the price in Germany (276,000 won) and 1.8 times the price in the US (394,000). The price of headlamps for the car was also 250% of the Germany price and 210% of the American price.
On the German Mercedes-Benz (E300), the front and rear bumpers cost 40% more in South Korea than they did in Germany, while the headlamp cost 30% more than in Germany and 80% more than in the US.
In South Korea, door panels for Chrysler (300C) were 30% higher than in Germany and 90% higher than in the US, with the headlamp selling for a 40% and 80% premium in South Korea compared to Germany and the US, respectively.
In contrast, there was virtually no difference between South Korean and overseas prices for the German Audi (A6) and the BMW (520d). In fact, the Audi headlamp and the BMW front bumper, hood, and front fender were 10% cheaper in South Korea than in other countries.
The survey also compared these five imported cars with four made in South Korea (Hyundai, Kia, GM Daewoo, Renault Samsung), all with 2,000cc engine displacement. The study found that imported cars cost nearly three times the price of South Korean cars on average, with the price of parts for imports recorded at 460% to 700% the price of parts for South Korean cars.
Take the BMW (520d), for example. The headlamp for the BMW costs 7 times more than the equivalent parts for domestic cars, the rear bumper costs 6.7 more, the front bumper 6.6 times more, the front fender 5.9 times more, the hood 5 times more, and the front door panel 4.6 times more.
As part of the survey, 100 car owners were asked about a program that the Ministry of Land, Infrastructure, and Transport launched in August of this year that makes the prices of car parts available online. 98% of respondents said that they had never used the program, while 72% said that they hadn’t even heard about it.
“The imported car parts market is governed by a closed distribution system, which is preventing price competition. Parts are imported by official importers for each brand - which are effectively monopolies - who then provide these to designated suppliers who sell them to the public. Consumers need to be provided with a comparison of prices in South Korea and other countries,” said Yoon Myung, director of Consumers Korea.
By Kwak Jung-soo, business correspondent
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