Home shopping channels allowed to sell cars

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Home shopping channels allowed to sell cars

Home shopping channels in Korea sell an assortment of goods ranging from home appliances to cosmetics, and soon, there will be one more thing couch potatoes can buy from their TV sets: cars.

The country’s two financial regulatory agencies, the Financial Services Commission and Financial Supervisory Service, on Wednesday approved the sale of cars made by local manufacturers on home shopping networks starting next March.

Currently, only imported and used cars can be sold on specialty home shopping channels. Cars produced by Korean manufacturers have been barred because local automakers also have affiliates that sell car insurance. Regulations prohibit car sellers from engaging in the insurance business over concerns that they may bundle automobiles with their insurance products. Many major home shopping channels are registered to sell insurance.

The revision would exempt home shopping channels from the rule.

“Home shopping operators must list all the conditions of a certain product while they air programs,” a source at the Financial Supervisory Service said, “so that they don’t engage in unfair tie-in sales by bundling their insurance with car sales without notice or consent from consumers.”

Another source in the finance industry said the law was initially aimed at containing the market dominance of conglomerates that own both car manufacturers and insurance units. But since home shopping networks occupy a small share of car sales, the source posited the Financial Services Commission was comfortable with lifting the regulation.

Since imported cars were not affected by the previous regulation, some say local carmakers are now at a disadvantage.

Although home shopping channels have not been a major avenue for buying cars, cable networks have been selling imported cars since the early 2000s.

This is how it works. Viewers typically sign a provisional contract with the home shopping network during program hours and send a deposit. They then schedule a test drive before deciding whether to buy or not. Customers who back out can get their deposit back.

Not all parties are happy with the revision. Salespeople in the labor union of Hyundai Motor, the country’s largest automaker, believe the home shopping channels’ entry into car sales will affect their own dealerships’ activities.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]

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