SEOUL, Feb. 25 (Korea Bizwire) - Major foreign brands selling cars in South Korea have decided not to offer any refunds to their customers despite the government’s recent tax cut, claiming that it has already been reflected in their ramped-up sales promotions, company officials said Thursday.
The government ended a 1.5-percentage-point excise tax cut at the end of last year. But once it expired, car sales dropped significantly, which promoted the government in early February to extend the consumption-boosting scheme until June.
The reduced tax rate will be applied retroactively on cars bought in January.
Some foreign auto brands including Volkswagen, BMW and Mercedes-Benz, however, have decided not to offer any refunds to customers, claiming that the tax cut was already reflected in their price tags and it was well notified to customers.
“We have paid the taxes for our customers since the tax reduction period expired. This means that the reduced tax rate has been factored in our promotion and discount programs from early January,” a Volkswagen PR official explained.
“Such benefit was a major promotion point so chances are slim that customers didn’t know about it. We also clarified details in our promotion, including the tax part on our website and in a press release announced last month,” the official added.
The move comes in contrast with other local carmakers, Hyundai Motor Co., and Kia Motors Corp, which said that they are now returning money to customers based on the lowered tax rate.
Ssangyong Motor Co. also said it has decided to provide refunds despite the fact that it had sold vehicles at tax cut-reflected prices in January and notified the discount to customers.
Customer complaints could grow as some foreign car owners argue that they should get their money back in line with the recent tax cut, which should be regarded as separate from promotional discounts.
According to industry data provided by the Korea Automobile Importers and Distributors Association, the foreign brands, which decided not to offer tax refunds, sold about 10,000 vehicles in January alone.
Market watchers said that the tax-related controversy could amplify dissatisfaction with foreign car brands, whose image has been tarnished following the so-called diesel gate involving German carmaker Volkswagen last year.