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Mercedes, BMW wage price war against Volkswagen.

German carmakers have begun offering huge discounts to increase their shares in the Korean market amid sluggish sales of domestic automobiles in recent years, according to industry officials, Thursday.

Mercedes-Benz Korea, which has maintained the top spot in the nation's imported car market over the past two years, is offering unprecedented discounts on its sedans to defeat BMW and Audi Volkswagen, which recently resumed its sales here.

Mercedes said discounts of up to 8.5 million won ($7,900) are officially available for its E200, the company's top-selling model which achieved sales of 4,212 in the first quarter.

With the official discount and various additional discounts, most customers can buy the 60 million won car for less than 50 million won.

Mercedes has discounted 9 million won from the price of its C-Class sedan as well.

The company has discounted an additional 5 million won on the model to those who return their used cars.

BMW Korea, the most competitive rival to Mercedes-Benz Korea, has discounted 17 million won on the 3 Series sedan and 3 Series Gran Turismo since February.

As Mercedes did, the company has carried out a trade-in promotion, a sales promotion technique in which the buyers are offered a fixed discount on the price of a new model in exchange for their used Mercedes.

In addition to its 12 million won official discount, BMW Korea's customers, who returned their used BMWs, received an additional discount of 5 million won.

The company is also discounting 10 million won on its 5 Series sedan released last year.

Industry officials regard Audi Volkswagen Korea's (AVK) sales resumption as a reason for the big discounts two German carmakers offer.

When AVK had suspended its sales in the Korean market over the past two years because of the emissions scandal, Mercedes and BMW collectively had a 30 percent share of the nation's imported car market.

The annual sales of Mercedes-Benz Korea surpassed 60,000 cars last year.

To retrieve its market share, AVK has also come up with discounts.

Volkswagen is officially offering a 10 percent discount on its Passat GT sport sedan and an additional 4 million won discount through the trade-in promotion.

Audi has offered up to 13 million won in discounts to users of Audi Finance, the carmaker's own financial service.

The price war is expected to intensify, if AVK releases more new models in the Korean market.

Critics, however, point out the game of chicken may cause consumers to distrust the imported car market and cause difficulties with dealers.

Against this backdrop, imported cars have increased their market shares in Korea.

Their cumulative sales in the first quarter surpassed 60,000 cars, up 22.6 percent from a year earlier.

In particular, Mercedes sold 21,633 vehicles during the period, up 13.1 percent year-on-year. The company had a 32.09 percent market share in the first quarter.

The Korea Automobile Importers and Distributors Association expect 256,000 imported vehicles will be sold this year, up 9 percent from a year earlier.

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Publication:The Korea Times News (Seoul, Korea)
Date:Apr 12, 2018
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