The Mercedes Benz SL600

Luxury import cars are disproportionately expensive in Korea compared to the U.S. or Japan, Chosun Ilbo analysis shows. Thus a Lexus LS430 costs W114.7 million (around US$115,000) including VAT. The same model costs half that in the U.S., where the price tag is $56,525. Even with all the extras, U.S. consumers can buy the LS430 for W74 million, W40 million less than their Korean counterparts. Much the same is true for the Mercedes Benz SL600, which costs W261.2 million in Korea but between W127 million and W153 million in America.

The reason is high taxes and distribution costs. Based on margins quoted by importers and distributors, taxes accounted for 20.5 percent (W35.61 million) and distribution costs for 27.7 percent of a consumer price of W173.70 million.

Imported car parts also cost an arm and a leg. A spot check at the service center shows that changing the driver-side wing mirror costs W1.2 million for a Mercedes SL600, W1 million for BMW 760Li and W650,000 for a Lexus LS430. That is three to five times as much as the same part of the Hyundai Equus, the domestic approximation of a luxury car, which is W204,600.

Importers are trying to introduce more affordable models prompted by grumbling from customers. When BMW Korea released the new BMW 320i here last year, it consulted with head office to push the starting price down to around W45 million, over 7 percent less than the previous model. Ford Korea in January launched the new-model 2,000cc Mondeo for W26.60 million, W5 million less than the last year's model.

Volkswagen Korea launched a mid-size sedan Passat with optional equipment at W38.4 million and will sell the semi-mid size Jetta sedan for around W30 million from April. Volkswagen Korea president Park Dong-hoon says importers whose prices are too high will lose their edge as the import market grows.