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Repair Costs Burden Consumers
Import Cars
Repair Costs Burden Consumers
  • By matthew
  • August 28, 2013, 04:57
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The BMW 320D pictured above costs 146,630 won (US$131.35) for an oil change in Seoul.
The BMW 320D pictured above costs 146,630 won (US$131.35) for an oil change in Seoul.

 

With the market shares of imported cars hovering at greater than 10%, the notion that only rich people can afford foreign cars is no longer true. It is attributable to more diverse cars on the market and more affordable car prices. In particular, as the number of imported cars in the price range of 20 million won (US$17,900) shot up dramatically in the first half of this year, the public perception that foreign cars are always expensive is changing. 

Currently, those imported cars in the 20 million won (US$17,900) range include the Volkswagen Polo & Golf, the Nissan Cube, the Honda Civic, the Toyota Corolla, the Peugeot 207 & 208, the Citroën DS3, and the Ford Focus. 

Despite reasonable prices, most consumers still hesitate to buy imported cars owing to exorbitant auto maintenance costs. Experts say that those costs are directly related to living expenses, therefore car insurance premiums, costs of expendable supplies such as engine oil, and auto maintenance costs should be lowered so that foreign cars are truly affordable. 

Unaffordable Vehicle Repair: Burden for Consumers

According to industry sources and the Korea Consumer Agency on August 27, maintenance and repair costs of imported vehicles are 3-10 times higher than those of domestic ones. As for replacement costs of engine oil, the Mercedes-Benz E200 costs 262,350 won (US$234.82), and Audi A4 with 177,540 won (US$158.72). And Audi A4's replacement value is 4-6 times higher than those of average domestic cars.

The BMW 3 Series cost 146,630 won (US$131.35) in 2009 and 136,180 won (US$121.89) in 2013 for an oil change, including costs for oil filters, air cleaners, auto mechanic labor, and value-added tax. Given that the sales of the BMW 3 Series increased 10,000 units for 4 years, the cost of an engine oil change has not risen. Other imported cars are in the same situation. 

In fact, high mechanic labor charges are one of the main factors in consumers' reluctance to buy imported cars. Kim Pil-soo, professor of Daelim University College, pointed out, "Even though mechanical maintenance skills at foreign and domestic car service centers are not that different, labor rates of imported cars are 3-4 times higher than those of Korean autos. That is the problem."

In terms of labor costs for an oil change, the Hyundai Sonata is 7,700 won (US$6.88), the Kia Lotze is 13,640 won (US$12.19), and the Renault Samsung SM5 is 14,800 won (US$13.23). For foreign cars, the BMW 3 Series costs 41,085 won (US$36.73), the Volkswagen Passat is 43,120 won (US$38.59), the Audi A4 is 48,510 won (US$43.45), and the Mercedes-Benz C200K is at 99,825 won (US$89.24).

Comparison of Repair & Maintenance Costs for Foreign & Domestic Cars
  BMW 320D Audi A4 Volkswagen Passat Mercedes-Benz E200 Hyundai Sonata Renault Samsung SM5
Oil Change ₩130,000 (US$116.48)

₩170,000 (US$152.15)

₩160,000 (US$143.36)

₩260,000 (US$143.36)

₩29,000 (US$25.96)

₩36,000 (US$32.26)

Brake Change

₩220,000 (US$196.90)

₩190,000 (US$170.05)

₩160,000 (US$143.36)

₩210,000 (US$188.16)

₩60,000 (US$53.76)

₩77,000 (US$68.99)

Labor Costs (included above)

₩41,000 (US$36.74)

₩48,000 (US$43.01)

₩43,000 (US$38.49)

₩90,000 (US$80.55)

₩7,700 (US$6.89)

₩14,000 (US$12.53)

Import Car Dealerships: High Maintenance Revenues 

Another problem is that maintenance revenues of the major import car dealerships have been rapidly growing for 3 years. 

The period of 2009-2012 saw massive growth in the foreign car market. Maintenance profits of Klasse Auto, Volkswagen's dealership, increased from 5.689 billion won (US$5.091 million) in 2009 to 18.125 billion won (US$16.223 million) in 2012. The corresponding figures of Handok Motors, BMW, and Mercedes-Benz's dealership were 12.312 billion won (US$11.031 million) in 2009 and 34.522 billion won (US$30.931 million) last year. Meanwhile, maintenance revenues of Dongil Motors, the Busan-based Toyota and Lexus dealership, were up from 332.93 million won (US$298,230) in 2011 to 887.52 million won (US$795,019) in 2012, which is an approximate three-fold increase in revenue.

The trend indicates that as the imported car market has been rapidly growing for 3 years, import car dealers have been getting a great profit from maintenance services. 

Therefore, it is quite natural to hear that consumers are voicing their complaints. A consumer said, "I purchased a foreign used car for the first time. When there was a problem with a head lamp, I visited a service center. And I was charged 3,000,000 won [US$2,685]. After that, I taught myself how to maintain vehicles. When self-examining my car, I found out that only an electrical wire was faulty. By the way, the price of a wire is 300 won [US$0.27]."

He continued by saying, "The service center demands that the entire module be changed although just a small part is defective. So, uninformed consumers have no choice but to comply and get ripped off." 

An official in the import auto industry commented, "There is a saying that people should know three kinds of experts in Korea. They are doctors, lawyers, and auto mechanics. If a person does not know any of these three types of professionals, he/she is bound to be overcharged."