[Brian's Stuff]For the love of an imported auto, what price would you pay?Harvard Business Review should write a report on how car importers in Korea have been able to milk consumers in grand style. Let me explain. Anybody who buys a BMW in Korea has probably worked hard to earn the money or they have inherited it. Either way, I am the last person to tell them how to spend their money. But I have to ask one question: Is it smart?
The reason I ask is the sticker price of, let’s say, a 335i model in Korea stands at 80.19 million won ($80,897), making it one of the priciest models available among the 3 series. Only the M-line and convertibles cost more.
You may wonder how much the model costs in other countries. A quick search on Google gives me a price range in the United States that is about half of that in Korea. It won’t exceed $60,000 with a fully loaded package that includes an iPod adapter.
Paying in cash can reduce the cost. In Korea, that is not possible. I asked one BMW car dealer what he could do if I paid in cash up front. “Uhm. All-weather door mats...” was the answer. Here, car dealers don’t barter much. The are glued to the sticker prices. Anyway, the price difference is close to $20,000. You could buy another car with that.
Then there is the dreaded import tax. Without it, Hyundai would probably go belly-up. The idea of paying nearly double the price for a commodity that I know I can get for much less drives me crazy. O.K., maybe only for “the sheer driving pleasure” from Germany would I be willing to shell out that kind of money, but there are other cases.
The Honda Accord series’ price tag hovers roughly between $19,000 and $27,000 in the United States, depending on the model. In Korea, you have to pay 30.9 million won for the 3.5 V6 VTEC model. Not that an Accord is a bad car. Don’t get me wrong. It’s rock-solid and I love it. But that love stops at $25,000.
In the end, it’s a marketer’s dream. People who are buying a Honda Accord for that kind of money don’t seem to mind. Some 50,000 imported cars were sold last year, according to the Korea Automobile Importers and Distributors Association. And nobody has jumped off the roof over the prices.
In a recent interview, Song Seung-chul, chairman of the Korea Automobile Importers and Distributors Association, said the difference in the economy of scales is a major cause for inflated prices. He said opening a dealership in Korea is more expensive than in the United States due to real estate prices. Translation fees for new manuals are steep, as well. Consumers have to pay for all that.
Consider this: The import tax on foreign cars was 80 percent in 1987. Today, it is 8 percent, leaving me to conclude that the car dealers in Korea are pocketing the rest. This poses a dilemma for me. If I had $100,000 to spend on a car, what should I do? Go for a Beetle but pretend to be riding in a Z4? Or should I just abandon any concern that one day someone will call me a fool?
For boys, it’s a hard decision to make.
By Brian Lee Staff Reporter [email@example.com]
with the Korea JoongAng Daily
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