International Fair Trade
The Fair Trade Commission (FTC) started an on-site investigation into the unfair business practices of car importers in Korea. Under the circumstances, some experts are pointing out that it could provoke trade disputes with their local market share rising rapidly and Hyundai Motor Company and Kia Motors discounting their products to protect their home turf.
The watchdog sent investigators to BMW Korea, Mercedes Benz Korea, Audi-Volkswagen Korea and Toyota Korea on February 19 for inspection purposes. The teams looked into the prices of their imported vehicles and auto parts, the possibility of preferential treatment for their associated finance companies, unfair trade practices between the importers and dealers, including the maintenance of the resale price to keep the prices of vehicles and auto parts at a high level, etc. The FTC has been engaged in document-based investigations into their unfair practices since earlier last year, but this is the first time that it sent teams of inspectors.
Car importers in Korea did not lower the prices of their products even after the implementation of the FTA between the EU and Korea that reduced the tariff burden. Even so, their local market share reached a new high of 12.9% in January. A total of 130,000 or imported cars were registered in 2012 alone, when the percentage topped the 10% mark for the first time ever.
The prices of auto parts for imported cars are much higher than those for domestically produced ones, too. According to the Korea Insurance Development Institute’s 2011 data, the former is about 6.3 times the latter. The labor and painting costs were 5.3 and 3.4 times higher as well.