Lack of after-sales service is the second biggest reason after high prices why consumers decide against buying imported cars, according to a recent industry survey.
Foreign cars are selling well in Korea due to reduced prices. Though still higher than Korean brands', the prices of imported cars have come down to a level that many consumers can tolerate given their performance and fuel efficiency. Some are even cheaper here than in the countries where they are made.
A Volvo S80 D5 costs W57 million (US$1=W1,131), W4 million less than in Sweden. Volkswagen's popular Golf 2.0 TDI sells for W33.4 million, a whopping 30 percent less than in Germany. The Nissan Cube costs W25.6 million here, about 10 percent less than in Japan.
But parts prices of imported vehicles are still high. It costs nearly W90,000 to replace the oil filter or wiper blades of the Mercedes E-Class. The repair costs are also much higher than for Korean brands. Each rear door of the BMW compact 320i costs as much as W663,000, and the labor cost is W60,000 per hour, nearly three times the cost for Korean mechanics.
Even damage caused by minor fender-benders is expensive to fix, and insurance for imported vehicles is two to three times more than for Korean cars.
Car dealers argue repairs of foreign cars are not expensive in Korea considering their prices in the global market. A spokesman for Mercedes-Benz Korea said, "We're providing quality after-sales service in Korea, and repair labor costs for high-tech vehicles shouldn't be the same as for cheaper cars."
And parts prices are falling as imported cars win a larger market share here. "The economy of scale is starting to show in auto parts," an official with the Korea Automobile Importers and Distributors Association speculated. "And parts prices for European cars dropped significantly due to the weakening euro."
But inconveniences remain. Since car dealerships run their own exclusive maintenance shops, it is nearly impossible for people to repair imported cars at a garage near their home. Instead, they have to head to designated after-sales service centers, and this gives foreign car dealerships a near-monopoly on parts.
"Imported cars are losing after-sales service competition to domestic car brands because you can take a Korean car to a garage in the neighborhood and many cheaper parts are available in maintenance shops," said Prof. Kim Pil-soo of Daelim College said. "If more imported cars are sold and the quality of their after-sales service improves, they'll have a sharper competitive edge in Korea and pose a greater threat to domestic brands."