FTC Looks into Benz Korea’s Taking Excessive Profits of Auto Parts

It has been found that the Fair Trade Commission (FTC) is investigating Benz-Mercedes Korea, an official importer of Mercedes Benz cars, over its taking excessive profits of auto parts.  

According to the FTC and the automobile industry on August 1, it is said that the commission has conducted probes of the German automaker and its distributor Hansung Auto since the middle of last month. “We looked into Benz-Mercedes Korea after securing circumstantial evidence that the company made enormous profits via an exclusive sales network,” said a representative of the import car industry. Benz-Mercedes ranks first in the Korean import car market by accounting for more than 20% of the market share.

Foreign car makers including Benz-Mercedes Korea put excessively big margins on auto parts and make consumers pay for them while selling them through importers and dealers.   The Korea Consumer Agency’s investigation found that major parts of the Benz-Mercedes cars, such as bumpers, headlights and side mirrors, were 25% to 50% more expensive in Korea than in Germany. This is because 9% to 22% margins were added to such products for importers and 16% to 28% margins for dealers.  

The FTC judges that the seller’s monopoly of a distribution network pushes up prices of auto parts. Alternative parts cheaper than original ones are under the control of Benz-Mercedes Korea, so other importers of parts or consumers cannot directly purchase them. Hansung Auto, an official dealer of Benz-Mercedes Korea was founded by Lei Shing Hong, an overseas Chinese business tycoon in Malaysia. Hansung Auto is the largest dealer of Benz-Mercedes cars as well as the second largest shareholder that holds a 49-percent stake in Benz-Mercedes Korea, the exclusive importer of the cars.