Taking Advantage for More Margins
The Fair Trade Commission (FTC)of South Korea investigated Benz-Mercedes Korea and confirmed the most of facts that the official importer of Mercedes Benz cars took advantage of dealers by lowering the ratio of their “fixed margins” or forcing them to order 1.5 times more cars than they need through the investigation. The FTC is also planning to impose sanctions as it considered Benz-Mercedes Korea intervening into dealers’ autonomous share acquisition an unfair trading practice using its powerful position.
According to industry sources and the FTC on Feb. 11, the FTC’s Seoul office completed the probes of Benz-Mercedes Korea over for unfair trading practices which were reported by the Financial Consumer Agency in September 2016 and started reviewing related laws to decide on sanctions by brining before the committee soon.
The FTC focused on an unfair margin distribution between Benz-Mercedes Korea and dealers. Benz-Mercedes Korea is under suspicion of forcing dealers to accept the new “2017 dealer bonus system” in 2016, which includes the lower rate of dealers’ fixed margins and higher rate of flexible margins. The dealers had to order more cars than they need to receive higher margins as well as unpopular models of cars. Their increased costs were directly reflected into consumers’ car prices.
An official from a dealer said, “The fixed margin of other imported cars’ dealers is around 10 to 15 percent. On the other hand, Benz-Mercedes Korea has continuously decreased the figure to a single digit since the German car maker entered the South Korean market in 2004. Mercedes Korea, which is in the superior position, changed the margin structure and forced dealers to accept its policy without making complaints.”