Mitsubishi coming to Korea

Mitsubishi, Japan’s No. 4 carmaker, will apparently enter the Korean market by the end of the year. With former majority-owner Daimler-Chrysler now conveniently out of the way, Mitsubishi is now rushing to start up car sales in Korea. The company hopes to get on track on the peninsula; should Korea and Japan sign a free-trade agreement in the next two-three years, the 8 percent tariff on Japanese cars would disappear, with Japanese cars then becoming price competitive. Japanese cars currently sold in Korea are about 40 percent more expensive than those sold in Japan or the United States.
Mitsubishi hopes to sell over 100 units in its first year in Korea. The company has reportedly decided to sell three models in Korea—the Pajero SUV, Eclipse sports coupe and the Lancer.

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9 Comments

random guy

Posted May 9, 2006 at 3:16 pm | Permalink

sweet, so now Koreans can truly understand why Hyundai cars have crappy transmissions -> Mitsubishi designed.
Ohyes.
jyce

Posted May 9, 2006 at 5:24 pm | Permalink

Just asking if somebody knows, but if the tarriff is only 8%, where does the remaining 32% come from? I know there are shipping and localization expenses and many other hassles in Korea, but it makes no sense to me why imported products should cost so much more here than they do in their country of origin.
cm

Posted May 9, 2006 at 7:22 pm | Permalink

random guy, that was the old Hyundai of the 1980’s.
wjk

Posted May 10, 2006 at 2:33 am | Permalink

yes, that was old Hyundai. In fact, in the US late 80’s, you could spot a Mitsubishi car on the road that looked very much exactly like a Hyundai Excel.

My understanding was that Koreans can’t control themselves buying up imported goodies, so the government artificially decreases the demand with tariffs.

US used to do this, too. When? Pre World War II.
Sugar Shin

Posted May 10, 2006 at 3:55 am | Permalink

Mitsubishi is coming… Pajero is a Spanish slang expression for “wanker”.
Hmm, that should tell us somethin’.
Brendon Carr

Posted May 10, 2006 at 7:08 am | Permalink

The importer also has to pay Value-Added Tax of 10% on top of the 8% import duty. A lot of price comparisons overlook the fact that sales tax in the United States is not advertised as part of the base price.

Another major price component here in Korea is the exorbitant cost of land and buildings, which seems to result from a deliberate policy of the government to restrict supply of new construction.
random guy

Posted May 10, 2006 at 9:29 am | Permalink

random guy, that was the old Hyundai of the 1980’s.

are you sure? both the Hyundais I bought in the 90’s had Mitsubishi transmissions which failed in
jyce

Posted May 10, 2006 at 10:22 am | Permalink

I knew the VAT on top of the tarriff amounts to 18%, but you still get huge price discrepancies of up to 100% (like the American robot vacuum cleaner I wanted to buy) from their market of origin that are just baffling. I’m just wondering if there are now new ways to inflate prices other than tarriffs by, for example, demanding some import license that’s difficult to get.

I don’t see prices for imported products getting more reasonable in Korea, and I wonder if an FTA is even going to make a difference if there are other non-tarriff methods for raising prices.
cm

Posted May 10, 2006 at 11:58 am | Permalink

Mitsubishi was a minority share holder of Hyundai. Hyundai totally stopped using Mitsubishi parts by 1994 or 1995. That was about the time when the two fortunes of the companies started shifting toward opposite directions.

The Marmot’s Hole