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| A mechanic replaces car parts at a Mercedes-Benz service center in this file photo. / Korea Times |
By Park Jin-hai
Automakers have been disclosing part prices on their websites since Aug. 2 after the government, faced with increasing complaints about expensive imported car parts, introduced a new rule.
But experts and consumers say the government measure is toothless and unhelpful.
"It is regarded by many as rather voluntary," said an official with the Korea Automobile Parts Association. "Automakers just need to have a price list pop up on their websites. But even if they don't, the penalty is very low."
The Ministry of Land, Industry and Transport took nearly a year to introduce the regulation, which states only that manufacturers must disclose the names and prices of all the parts they sell.
Parts manufactured since January are subject to the new regulation. The penalty for non-compliance is 3 million won.
"Unless the relevant law stipulates that automakers must write the list in such a way that customers can easily find the price information they need, they will retain this mazelike system," said Yang Che-yeul, a business administration professor at Chonnam National University.
Annual sales of imported cars surpassed 150,000 last year. This year the number is expected to reach 180,000.
Foreign car brands have cut vehicle prices in the fierce competition for market share, but part prices have remained largely untouched. Many customers suspect that automakers are trying to offset lower vehicle prices by inflating part prices.
"The prices being disclosed reflect retail prices, not the cost of manufacturing the parts," said the KAPA official. "Customers have no way of knowing how much they have been marked up."
According to the Korea Insurance Development Institute, repairs for an imported vehicle in 2012 cost 2.8 million won on average ― triple the repair costs for the average domestic vehicle, which stood at 919,000 won.
Auto parts, in the case of imported vehicles, accounted for nearly 60 percent of all repair costs at 2 million won on average. For domestic cars, the corresponding figure was 400,000 won.
Customers complain that it is difficult to use the information on the automakers' websites.
Kim Sung-bin, the owner of an Audi A4, is one such customer.
"When I typed in the model of my car, I was disappointed to see a long and random list of all car parts," he said.
"It is like a serial of encoded messages. To know the price of the part that I need to replace, I need to know its exact 10-digit model number and then click each page to search. Who would go to such trouble?"
The Audi A4 2.0 TDI, for instance, has a 186-page part list and no search function is provided. There are 53 kinds of "cover," ranging in price from 300 won to 1.18 million won, with no additional information to distinguish the different kinds of covers.
Other imported vehicle websites are no different.
Most are written in English, and customers must type in the exact name of a part in English to find the price.
Growth of aftermarket industry
One solution Yang proposed was the growth of the aftermarket auto parts industry.
"The higher part prices stem from a market system in which imported carmakers supply their parts monopolistically," he added. "If the repair parts market offered free competition, the price would go down."
Replacement parts are categorized as genuine, original equipment manufacturer (OEM), or aftermarket parts.
"Genuine" auto parts are those originally put in the car; OEM parts are the same, but do not carry the carmaker's logo; and aftermarket parts are made by a company other than the original manufacturer.
Aftermarket auto parts might look slightly different, but they perform as well as OEM parts and are much less expensive.
"We are producing fenders for the BMW 5 series as early as October and the retail price will be around 300,000 won," said Chung Ho-sun, executive director of Ulsan-based parts company TOP IND, during a recent seminar on the aftermarket industry. "With the service costs included, it will cost some 500,000 won."
Replacement of a fender at an official BMW service center costs about 1 million won, including a service charge.
The Automotive Management Act, revised last year, will authorize local carmakers to produce aftermarket parts beginning in January.
KAPA says the regulation will lower part prices by 50 percent.
Manufacturers of imported vehicles oppose the plan, citing safety concerns. But KAPA said aftermarket auto parts would be limited to fenders, hoods and covers that are not directly essential to driver safety.
"In the U.S., aftermarket products hold 40 percent of the market," said the KAPA official.
Insurance, one of the biggest hurdles to the growth of the aftermarket parts industry, has also received a helping hand from the government.
Until now, when car owners bought aftermarket parts after car accidents, insurance did not cover the cost. But that will soon change.
Last month, the land ministry entered into a memorandum of understanding with Dongbu Life Insurance, and various insurance products will become available as a result.
