FTC targets dominance of Hyundai automakers

The Fair Trade Commission is launching an investigation of what its deputy chairman called the near-monopoly status that Hyundai andKia enjoy.
“Consumers are increasingly losing benefits” due to the fact that Hyundai Motor and Kia Motors, under one parent company, control more than 70 percent of Korea’s auto market, Kim Byong-bae, deputy chairman of the Fair Trade Commission, said yesterday. He made his comments in a lecture to business leaders arranged by the Korea Chamber of Commerce and Industry in Seoul.
“When the two makers were separate in the past [Hyundai acquired then-bankrupt Kia in 1998], they used to provide interest-free loans for new buyers, but I have never heard of such a service offered nowadays,” he said.
Representatives from Hyundai and Kia declined to comment in response.
Later yesterday, Kwon Oh-seung, chairman of the fair trade watchdog, confirmed on a local cable TV show that the government agency has launched a probe into whether Hyundai and Kia are abusing their market dominance.
Under the fair trade law, a top-ranking company that holds a market share above 50 percent, or three top firms with a share of 75 percent or more, are considered a monopoly.
The commission head said some consumers have complained that Hyundai and Kia cars sold in Korea cost much more than they do in overseas markets, and the agency is studying the impact of that practice.
According to data from the trade commission, a 3.8-liter Grandeur sedan from Hyundai costs 40.3 million won ($43,400) in Korea, but 25.3 million won ($27,120) in the United States.
For a 2.4-liter Sonata sedan, the price difference in the two markets amounts to more than 9.5 million won.
Kim, the deputy chief of the agency, said import cars are rapidly gaining market share in Korea due to the practices of Hyundai Motor Group.
While import vehicle sales during the first three months of this year shot up almost 27 percent from a year earlier, Hyundai Motor saw its local market share drop below 50 percent from December through February, lower than it has been during past years.
Meanwhile, Hyundai Motor Group Chairman Chung Mong-koo attended a second hearing yesterday at Seoul Central District Court that he hopes will lead to his three-year jail term being commuted. He was sentenced to a three-year prison term on Feb. 5 on charges of embezzlement and breach of trust.

By Seo Ji-eun Staff Writer [spring@joongang.co.kr]