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The SK Group subsidiary announced it plans to acquire various import cars such as Mercedes, BMW and Lexus through big overseas dealers, and sell them at lower prices in Korea. The company said it is in the final stage of completing the purchase of some 400-500 Mercedes S500L.

Meanwhile, there are forecasts that Benz Korea will have to give up its high-price policy now it has been ordered by the Fair Trade Commission to stop keeping prices artificially high.

◆ SK Networks’ gray imports

SK Networks plans to offer the cars at W50 million (US$1=W926) cheaper than the ones sold by the official importer. Right now, the model is being sold at W206.6 million, with SK Networks expected to sell them for W150 million. SK is also in process of becoming the official importer of Volvo, Infinity, Chrysler, Peugeot, Jaguar and Land Rover. An industry insider predicted a 10 percent drop in the price of foreign cars if the results of the government’s price probe of import cars and SK Network’s gray imports both impact the market at the same time.

◆ Overpriced imports

If the National Tax Service’s tax probe of Mercedes-Benz Korea shows that the importer brought in the cars at much higher prices than in other countries, a price drop is inevitable. The NTS is concerned that if Benz Korea imports cars at an artificially high price, the profit goes to headquarters, reducing the profit for the Korean branch and thus leading to tax evasion. As much as W10 billion in taxes could be imposed on Benz Korea. Last year, a much smaller auto importer was slapped with about W3 billion in additional tax after being investigated on the same suspicion.

◆ Price competition

Last Thursday, the Fair Trade Commission ordered Mercedes-Benz Korea to end practices such as banning dealers from offering discounts or gift certificates to customers. According to the FTC, Benz Korea controlled the price by imposing high fines on dealers if they sell cars below the company’s fixed price. There are forecasts that once Benz Korea loses its grip on dealers, competition will become fierce ? to the point of a price war. An executive with a car importer said, “Once the competition heats up among dealers, some will be ready to reduce their profit margin to increase sales.”

(englishnews@chosun.com )