New rules, prices for auto industry

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New rules, prices for auto industry

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In the new year, automakers and dealers will deal with new policies. And car buyers will spend a little more after a special consumption tax cut ended on Monday.

The government in September announced it would slice 1.5 percentage points off the automobile tax, hoping to boost domestic demand.

The tax on vehicles with engine displacements of under 2 liters went down to 3.5 percent, while cars with engine displacements over 2 liters were taxed at 6.5 percent.

Now the tax imposed on vehicles with engine displacements under 2 liters will be returned to 5 percent. But cars with engine displacements over 2 liters, the tax will be only 7 percent since a 1 percentage point deduction goes into effect from the Korea-U.S. free trade agreement. According to the agreement, the tax has to be lowered on all cars sold in Korea, not just U.S. imports.

But cheaper price tags are expected on Europeans cars from July 1 as their tariffs will be sliced 2.4 percentage points to 3.2 percent as a result of the Korea-European Union FTA. Automakers have yet to disclose new prices.

Some rules are changing to protect Korean drivers and pedestrians.

From Aug. 16, all multipurpose vehicles (MPV) are required to have speed limit devices that keep them from going too fast. Currently, the law requires such devices on passenger-carrying MPVs over 4.5 tons and cargo trucks that weigh more than 3.5 tons.

Once a vehicle reaches a predetermined top speed, its computer steps in and restricts the flow of air and fuel to the engine. The maximum speeds are usually determined by the car manufacturers depending on the vehicle’s engine capability.

In the EU, such systems have been mandatory on MPVs since February 2011.

The Ministry of Land, Transport and Maritime Affairs said that the revised rule will reduce car accidents and reduce fuel consumption.

In addition, all passenger cars and commercial vehicles under 3.5 tons that are manufactured from this year must be equipped with tire pressure monitoring systems.

All cars made after March 30 will be required to have three-point seat belts. Passenger vehicles must have the belts on all seats, while commercial vehicles need them on the front seats.

For pedestrian safety, the ministry said from this year, passenger cars that earned below 70 points on pedestrian protection tests will be recalled.

In last year’s Korean New Car Assessment Program, the Korea Transportation Safety Authority included a pedestrian protection test. All 11 models tested scored poorly. Hyundai Motor’s Santa Fe and GM Korea’s Malibu tied at 63.3 points and Kia Motors’ K9 received 56.7.

The Transport Ministry will also require more information on vehicles’ fuel consumption. From this year, all cars sold should be marked with their fuel efficiency on highways, in cities and on average.

To earn the first rank for an Energy Consumption Efficiency Grade, vehicles will need to have fuel efficiencies of 16 kilometers per liter (37.6 miles per gallon) of fuel, up 1 kilometer from the previous standard.

Consumers will also have more protection when purchasing a car. According to a new clause in the Automobile Management Act, automakers or dealers now have to notify consumers if a car on sale was returned by a previous buyer. And to prevent cheating of used car customers, the government will introduce an Automobile Information Management System from this September. Those who trade in a car will need to reveal information such as its age, mileage and repair history. The information will be put online.

By Joo Kyung-don [kjoo@joongang.co.kr]

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