BMW Korea said on Wednesday it will reduce prices by an average of 1.4 percent in July to reflect tariff cuts under the Korea-EU free trade agreement.

Some of the German carmaker's models have already benefited from the price cuts since this month. The 730d and 740Li sedans, previously costing W122 million and W146.3 million, are now 1.4 percent or W1.7 million (US$1=W1,168) and W2 million cheaper.

Mercedes-Benz also lowered the prices of all of models by an average 1.4 percent this month. Other European automakers including Audi and Jaguar will follow suit next month.

The tariffs on European cars are being lifted gradually, falling from 8 percent before the trade pact to 5.6 percent in 2011, 3.2 percent in 2012, and 1.6 percent in 2013. They will be fully scrapped in 2014.