SEOUL, March 8 (Korea Bizwire) – Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. have spent about 20 billion won (US$16.7 million) to offer tax refunds to their customers who bought vehicles in January following the government’s decision to extend a tax reduction on car purchases, industry sources said Tuesday.
The Seoul government lowered the tax rate on new car purchases by 30 percent from August to December last year. When it expired, car sales slowed in January, which prompted the government to extend the consumption-boosting scheme until June.’
The decision was made earlier in February and was retroactively applied from the start of this year.
Following the government’s lead, the two South Korean carmakers have doled out a combined 20 billion won to pay tax refunds for about 30,000-40,000 customers who bought cars in January.
The extended tax cut has cost Hyundai Motor and Kia Motors 11 billion won and 9 billion won, respectively. Customers have received money ranging from 200,000 won to 2.1 million won each depending on their car models, the sources said.
The move comes in contrast with other foreign brands, which have expressed unwillingness to follow suit, claiming that they offered deep price cuts and sold vehicles at almost the same prices in January in order to offset the impact of the rolled-back tax rate.
Apparently under growing pressure from customers, however, the local unit of Mercedes-Benz in Korea recently decided to offer tax refunds to its customers but other foreign brands including Volkswagen have remained unchanged from their early stance.