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I say, blame the doenjangnyeo for Lexus prices

Toyota is being accused of employing a dual pricing system with its Lexus luxury-car brand, selling the vehicles for much higher prices here than in the United States.

The Lexus ES350, for example, is over twice as expensive here than in the United States, the Korean Times reports.

The phenomenon is being blamed on a) Toyota and b) Gangnam consumers who are accused of not just tolerating higher prices, but actually preferring them.

Interestingly enough, Korean cars appear slightly cheaper in the U.S. market as well—the basic model Hyundai Azera goes for 24,535 U.S. dollars in the United States, while in Korea, the base model Grandeur (same car, different name) goes for 26 million won, or 28,000 U.S. dollars. Strange, given that the cars (the Azera, anyway) are built here and then shipped to the United States. Of course, it could just be that the Korean basic model has more stuff—I didn’t check the specs that carefully. Or it could just be another case of neo-mercantilism. Or perhaps Hyundai is doing the same thing as Lexus—playing into the fixation of the “Gangnam consumer” with price tags. You decide.

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  • Bipolar Mindscrew

    During my last visa run to Osaka, I couldn’t help but laugh my ass off at how much Japanese people have to pay for flash cards. The fact is that 64MB cards were actually available in stores and the 1GB SD cards were a shocking 10000 yen… nearly double the price as compared to Korea. The cheapest among flash cards were (of course) the Sony memory sticks… which are 20-40% more expensive anywhere else. Obviously the Japanese pay through their nose for the Sony name as much as anyone else but the prices of the competition has been inflated… why?

    There are inflated price systems everywhere. The Nintendo Wii will cost far more in America than in Japan. The PS3 will cost way too much in Europe. Coffee itself is an inflated price. Starbucks bean farmers are paid pennies…

  • michael

    When news of this price gouging reached Africa the genocide in Sudan stopped because everyone was so stunned…I heard the pope was really shook up too.

  • huey222

    A Hyundai Azera with every available option (including an $85 dollor mat in the trunk and $55 wind deflector for the sunroof) has an MSRP of $30,735 USD in the US. http://www.hyundaiusa.com/shoppingtools/byo/model.aspx?vehicle=Azera

    A Hyundai Grandeur with every available option (except for DVD navigation which is not offered in the US [a 1.3 million won optino BTW]) has an MSRP of 40,830,000 KRW in Korea. http://www.hyundai-motor.com/OwnersClub/CarInfo/CarInfo_Deluxe.aspx?gmodelcode=YFA

    At today’s exchange rate of 930 KRW/USD that works out to $43,903 USD in Korea for the same car that costs $30,735 USD in the States!

    The other thing to consider is that cars often sell for less than MSRP in the States, while in Korea, the asking price is usally the selling price.

    So MSRP to MSRP there is a difference of more than $13,000 USD for the same car. In the real world, after dealer rebates in the US, the difference would be closer to $15,000 USD I reckon.

    Dumping (in the US) or gouging (in Korea)? Probably both.

    What a rip!

  • Rohclue

    Unless things have changed in the past few years, a Korean Grandeur buyer could expect to get an inferior version with poorer safety features (ie lower grade windshield glass) for the extra 13-15 grand he/she has to fork out. Korean car purchasers just have to convince themselves that they are being good patriots while they’re getting shafted.

  • http://www.sperwerslog.com Sperwer

    In addition to the data compiled by huey222, it’s worth bearing in mind that the US model Hyundais are built with heavier gauge sheet steel – so that they represent even greater value than appears.

    Why are the Japanese getting singled out here – as if I didn’t know? Last time I checked for the price of 1 in Korea you could buy 2 7series BMWs in the US. Similar price discrepancies afflict Mercs. And even most run of the mill US cars offered here can be had for significantly less Stateside.

    A significant amount of the price differential can be directly attributed to the various tariff and non-tariff barriers erected by the neo-mercantilist regime here. But just as local protectionism largely absolves the mfrs. so does it explain the conduct of the overpaying snobs whose taste for over-priced cars and the the way in which the mfrs play to and take advantage of such cupidity, both of which themselves are an indirect result of the short-sighted protectionist racket forced on everyone by the alliance of ROKGOV and ROKBUS known as Korea Inc.

  • SomeguyinKorea

    Yes, Korean consumers are simply getting ripped off by import car dealers. The dealers simply know that most of the consumers think that imported cars are expensive because of duty and taxes. In reality, Korean taxes and duty on imported cars are pretty much equal to what you would see in North America and Europe. The inflated cost of bying an import allows dealers to sell domestically produced ‘luxury’ cars for far more than what is reasonable (ie. the price difference between the Grandeur and the Azera (which sells for what people are willing to pay for a Korean car in North America given the price of other imports)).

  • http://x85130c4.spaces.live.com/ Mark

    A couple of Koreans I know think that Lexus is an American brand. Let’s keep it a secret who really owns Lexus, and then the Koreans will keep buying them up, because they do wonders for ch’emyon. Japan could use the extra cash for Aegis destroyers and Patriot batteries, anyways.

  • http://www.jdlink.co.kr Linkd

    Check http://www.apectariff.org. korea’s tariffs on imported autos is 8%, vs 2.4% for USA. That accounts for about $4400 of the difference Huey points out.
    This Korean,

    http://joongangdaily.joins.com/200605/21/200605212123462579900090509051.html

    brought his Grandeur back from the States, paid only $18,000 USD for it. And for first half 2006, foreign autos hit a new record in Korea, taking 4.4% of the market.

    http://joongangdaily.joins.com/200607/09/200607092146396879900090509051.html

    I don’t know what Korea’s quotas are, but as a simple economic fact you can’t have domestic producers taking 95% of a market, with high domestic prices, unless there are import quotas. So what do you do when you face a quota on products you want to export to another country? You make sure that each unit you send there is as profitable as possible, that means the high-priced units with all the extra features you can stick on. Doing so, you indirectly help the local producers keep their prices high, too.

    But the real thing is likely the suffering of Ford and GM. Hyundai doesn’t exactly have to fight for market share in Korea, but it has to fight like hell for market share in the US. Ford and GM are willing to make huge price concessions just to keep generating any kind of cash flow these days. If Hyundai wants to stay in the game there, they have to offer lower prices. Hyundai isn’t dumping cheap cars in the American market, Ford and GM are.

  • SomeguyinKorea

    While we’re at it, lets keep it a secret who are the major shareholders in Hyundai Motors.

  • SomeguyinKorea

    Well, there’s something about that sentence that doesn’t look right. Sorry.

  • http://www.wmga.net captbbq

    MBC had a 불만제로 episode on this today: http://www.imbc.com/broad/tv/culture/zero/vod/index.html

    it costs 500won to view though, but its a 15 minute segment, and its best to skip the first 5 minutes of it, but it breaks down many differences between domestic end export models. Its also funny to see them point out all there glaring differences between the models, (and all the things not different) and then stick at the end an interview with the Hyundai exec who says in so many words thats theres nothing different.

    The show also contradicts several comments here. Anyway, its worth the 500 won. (Wait and I’ll put it on my blog for free tomorrow, if I have time)

  • SomeguyinKorea

    I’m considering having a 60′s Ford Mustang with an Edelbrock or Roush supercharged engine shipped over here (I figured it’s doable for under 20 000$). That would get tongues wagging.

  • seouldout

    At least they can ‘t be accused of dumping. Dram_Man (I recall) covered the taxes (and taxes on taxes on taxes) a while ago here.

    Also of note is the warranty offered here by both foreign and domestic automakers; it pales to those offered in the US.

    The wife’s in the shipping business, and the demand for Mercs & BMWs is so strong that some customers will pay to fly them in rather than wait for the boat.

  • seouldout

    Someguy, that’s a hella of a machine, but I doubt it’ll pass the emissions test. And yes, older cars have to meet today’s standards–nothing grandfathered in here. Those wagging tongues will those of the officials at the test center who’ll keep failing your car at approx. 800,000 won a crack.

    Getting parts will be a bitch too.

  • SomeguyinKorea

    seouldout, maybe so. That’s why I mentioned the Edelbrock and Roush engines. I know some people in California have have these custom built engines in their cars…But, I’d have to check if that’s only possible because classic cars are exempt from the emissions tests in California. Couldn’t I get around from it by registering the car in my brothers name in Canada and driving it here with Canadian plates? (of course, this is all hypothetical because the old ball and chain would never go for it)

  • seouldout

    Someguy, is here Korea or California? If your here is California then there is an exemption for classic cars. Yes, you could drive it to the US, but most states, if not all, require cars to be registered in the state where the owner resides. If here is Korea there is no such exemption, but there are no classic cars either. Haven’t seen a Maepsi, Pony or Granada in years.

  • SomeguyinKorea

    Of course, I’d compare the emissions standards, etc. You know, the internet can be pretty useful sometimes.

    “…South Korea’s regulations will be brought into line with California’s Ultra Low Emission Vehicle parameters for gasoline-fuelled cars.”

    http://www.platinum.matthey.com/media_room/1074081601.html

    http://www.edelbrock.com/automotive_new/misc/company/about_the_company.shtml

    http://www.roushperf.com/news.cgi?type=rel_story&sid=29

  • huey222

    Here is a graphic (2 seperate pics) showing relative costs of vehicles in Korea, the US, Germany, and Japan. I’m not sure of the source, but most of the figures seem to match those that we’ve been talking about.

    http://file1.bobaedream.co.kr/national/national1164391770.jpg
    http://file1.bobaedream.co.kr/national/national1164391771_2.jpg

  • SomeguyinKorea

    seouldout, here or California, it doesn’t matter.

    “The South Korea government has revealed that new emission standards for automobiles will apply to vehicles manufactured after January 2006.

    It means that South Korea’s regulations will be brought into line with California’s Ultra Low Emission Vehicle parameters for gasoline-fuelled cars.”

    http://www.platinum.matthey.com/media_room/1074081601.html

    If you had paid attention, you would have noticed that I was dreaming of getting a classic car already modified with a new custom engine (probably an Edlebrock since the Roush engines can be twice as expensive).

    “For Edelbrock street products, our engineers use our Emissions Lab to test and certify parts. Designed specifically to comply with the Environmental Protection Agency’s Code of Federal Regulations for vehicular emissions testing, the Edelbrock Emissions Laboratory provides vital data that is accepted by the EPA and the California Air Resources Board. ” (edelbrock.com)

    Not too sure about Roush engines’ emissions, but they seem to produce at least one that meets American standards

    “What do you get that you can’t do yourself? In addition to extra time to watch Speedvision (okay, Baywatch reruns?), you’ll get an EPA-certified, 360-hp ‘Stang that’s legal in all 50 states. (No bowing and scraping before your local smog ref required!) ” (roushperf.com)

  • SomeguyinKorea

    Double post…first was posted yesterday, second today. I’d delete the first one, Marmot. I guess the first was delayed it had too many links. I thought it hadn’t saved, so I posted a second.