Firm to Sell Imported Cars to Public for 15% Less Than Dealers

SK Networks, a general trade company under SK Group, will sell high-end imported cars directly to the public, instead of through domestic import car dealers. The move will send shockwaves through the import car market as the company is planning to sell expensive models, including Mercedes, BMW, Audi, and Lexus, at prices 15% lower than dealers in Korea.

Yesterday, SK Group announced that its affiliate would begin to import and sell around 100 luxury sedans starting November. One company official said, “The first order of cars was decided on after receiving requests from our clients, and they are being shipped to Korea now.”

The makers and models include the Mercedes Benz S550L, E350, and AMG Series; the BMW 750Li, 530i, and 335i; the Audi A8 4.2, A6 3.2; and the Lexus LS460L. The selling prices have not been finalized, but they will be 15% cheaper than those of domestic dealers. Unofficial dealers are offering the same models at prices 25~30% lower than official dealers.

SK Networks is building showrooms and customer centers for sales and maintenance activities in Bangbae-dong, Seocho-gu, and Bundang, Gyeonggi, and have secured experienced mechanics.

More Choices for Consumers –

The move by SK Networks is expected to have a great deal of implications to both official and unofficial dealers. Official dealers, who have charged maximum 110% more than the going price in the U.S., citing the small Korean market size, will be hit hard, in particular. The oft-cited problem of insufficient maintenance work by import car dealers will be solved as the trade company will provide systemic services through its nationwide service centers chain Speed Mate.

Meanwhile, official dealers have rushed to improve their services. For instance, starting from October 4, Mercedes Benz introduced “Pick up and Delivery Service” where a customer’s car will be picked up and delivered back to him or her when maintenance work is complete. Other dealers, including Lexus, will adopt the same service.

Some domestic official dealers asked their headquarters to prevent overseas dealers from selling automobiles to SK Networks. Mercedes Benz in particular warned American dealers of the adverse consequences.

One industry insider said, “If official dealers respond by lowering prices even further than SK Networks, the existence of the market itself will be jeopardized, but from the customers’ point of view, they will benefit from the better service and prices.”

mobidic@donga.com changkim@donga.com