Service for Booming Foreign Cars Slow to Improve

More than 1.1 million foreign cars were registered in Korea as of April, but after-sales service is slow to improve apace with booming sales.

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Imported cars accounted for a paltry 0.4 percent of the domestic market in 2000 with only 4,400 vehicles sold, but their market share has surged to 13.9 percent last year and 15.9 percent so far this year.

But customers complain of the inconvenience in after-sales service as there is a shortage of repair shops. They have to wait at least three weeks to have their cars repaired.

◆ Long Waits

The Chosun Ilbo researched the official service networks of 20 foreign carmakers here and found 359 in operation across the nation. BMW operates 43, Mercedes Benz 35, Volkswagen 28 and Audi 25. That boils down to at least 2,200 cars being handled by each official service center based on the number of imported cars sold over the last three years, which is the maximum warranty period.

In contrast, Hyundai runs 1,420 service centers nationwide, and affiliate Kia 840, which boils down to 1,404 and 1,672 cars being handled per shop.

That can lead to waits of three to four weeks for repairs or maintenance. Market researcher Consumer Insight polled 42,618 owners of imported cars on their views of service quality and found that the biggest complaint was long waits.

◆ Expensive Parts

Another major complaint is the high cost of maintenance, which runs into millions of won. Lee Jeong-won (37), who owns a Nissan Rogue SUV, said, "I had to pay more than W2 million just to straighten out a minor dent". (US$1=W1,107)

According to the Korea Insurance Development Institute, repairs cost an average W2.74 million for imported cars last year, compared to W952,000 for Korean automobiles, while parts are up to 4.6 times more expensive.

Consumers Korea researched parts prices at Audi, BMW, Chrysler, Lexus and Mercedes and found that 17 of a total 30 components cost between 1.6 to 2.3 time more than Korean parts.

Moon Hak-hoon at Osan University said, "Prices soar due to a complicated distribution process similar to the farming industry, and the middlemen get rich".

This has led to complaints that foreign carmakers are making more money from repairs than from selling cars. A look at the 2014 audit books of the official importers of Audi, BMW, Mercedes Benz, and Volkswagen shows their profit margin at 0.6 percent from sales but at 11.4 percent from repairs.

Another problem is a lack of mechanics. Importers say it is not easy to find skilled repairmen meeting their standards in Korea, and they are busy scouting mechanics from rivals. A Volkswagen Korea staffer said, "There is a high turnover among repair workers, so we're having a hard time finding replacements".