BMW Fires Deal Blow to German Luxury Carmakers

Consumers in Korea are growing increasingly suspicious of imported luxury cars following a raft of unexplained fires of BMWs. Import sales have soared in Korea to account for 18 percent of total car sales in the first half of this year, but the latest scandal has shattered long-held faith in their superior quality.

One 34-year-old motorist in Busan now regrets buying a Volkswagen Jetta three years ago. Smoke billowed from the engine recently even though he only had the car checked by a certified dealership in February.

He managed to extinguish the fire under the hood, but what faced him next was a nightmarish series of bureaucratic hurdles as he tried to get compensation for the damage.

"I demanded compensation but the dealership refused saying the cause could not be identified," he said. "It wanted me to share the cost of repairs. I had the car fixed, but I've been too scared to drive it. I'm never going to buy another Volkswagen car."

A staffer at the German automaker denies Volkswagen was to blame.

A woman surnamed Song (57) was driving her new Mercedes E350 in Seoul four years ago when she heard a loud bang as she was about to make a right turn and lost consciousness. It turned out that the headrest was activated automatically and jolted forward to prevent whiplash even though the car suffered no rear-end collision.

Song suffered injuries to her neck and filed a lawsuit against Mercedes-Benz. The automaker told a court that another car had veered dangerously close to Song's Mercedes and tripped the headrest sensor.

Another woman surnamed Jung (58) bought a Volkswagen Passat five years ago and has now joined a class-action lawsuit against Volkswagen seeking compensation for the diesel emissions-rigging scandal that rocked the German automaker between 2015 and 2016. "It makes me angry to see owners in the U.S. get compensation while owners in Korea are ignored," she said.

According to the Korea Consumer Agency, the number of claims filed against imported automakers rose from 201 in 2014 to 307 last year.

Volkswagen and Audi recently resumed car sales in Korea and have been offering steep discounts to regain market share. An industry insider said, "Volkswagen desperately needs to regain market share, and Korean consumers are very prone to buying luxury imports if discounts are offered."

Although concerns over the quality of imported cars have risen, they have not translated into better sales for Korean cars. Lee Hang-koo at the Korea Institute for Industrial Economics and Trade, said, "A lot of consumers are satisfied with the price and quality of Korean cars, but many still feel they are lacking in terms of design and performance. Korean automakers need to do some catching up."