Volvo slashes prices to compete with U.S. FTA

Sweden-based automaker Volvo has joined the race among foreign automakers to lower their price tags in Korea, begun partly by the strong won and partly by worries that a Korea-U.S. free trade agreement will lower the prices of American cars in the Korean market.
Volvo Korea yesterday launched next year’s version of the S60 2.5T sports sedan. The price of the new model is 43 million won ($45,600), 3 million won lower than the old version. The automaker is also offering the 2008 version of its diesel-fueled sports sedan, the S60 D5, at 42 million won, down 2.8 million won.
Though the audio system and headlights have been upgraded in the new models, their prices have been lowered, the company emphasized.
“We need to secure price competitiveness. With the imported car market expanding, many imported vehicles now sell at prices similar to Korean cars,” said Lee Hyang-lim, chief executive of Volvo Korea.
Another European automaker, Volkswagen, also plans to cut the prices of some of its models, including the diesel-fueled Golf compact, next month. A representative of Volkswagen Korea said the company is reviewing the scale of the discount.
In June, Ford Korea launched this year’s version of the Escape sports utility vehicle at 300,000 won lower than the old version. The U.S.-based company said that though the new model is worth 3 million won more than the old version due to upgraded features, the automaker has priced it lower, taking a tariff cut following the Korea-U.S. FTA into account in advance.
The two countries completed free trade talks in early April. The pact will take effect if the U.S. and Korean parliaments ratify it. If it does, the 8-percent tariff on cars from the U.S. will be removed immediately. To compete with U.S. automakers, European producers have been cutting their prices this year. BMW Korea in May launched its new 528i sedan, offering it at 67.5 million won, 19 million won cheaper than its predecessor, the 525i.

By Moon So-young Staff Writer/ Han Ae-ran JoongAng Ilbo [symoon@joongang.co.kr]