Lexus Korea: Some Issues and Insights

Once again the dynamics of Korean status surfaces...

Toyota and other foreign carmakers are accused of using a two-tiered pricing system that sells vehicles in Korea at higher prices than in other countries, notably the United States, industry sources noted.

They say that this pricing system is employed partly in consideration of wealthy Korean customers who prefer expensive cars.

Among the imported cars sold at much higher prices than in the U.S. are Toyota Motor KoreaÂ’s Lexus series, premium sedans and sports utility vehicles.

If the consumer price of Lexus 350 here were priced at 36 million won ($39,000), the same as Hyundai MotorÂ’s Grandeur TG, KangnamÂ’s wealthy residents would not buy it, a foreign carmaker representative said.

Koreans consumers are buying the Lexus ES350, introduced in the domestic market last year, for 63 million won. It is being sold in the United States for 31 million won ($33,200).

It seems that Toyota prefers higher margins by targeting wealthy minorities to mass selling by targeting the middle income bracket in Korea, the official said. As long as wealthy residents have the desire to own imported cars, foreign automakers will not lower prices. He said that these buyers know of the price differences but donÂ’t protest.

Despite a series of complaints from consumer advocates, Toyota Motor Korea has kept their pricing practices. The newly launched Lexus LS460L is priced at 163 million won here while American consumers are buying the sedan for about 90 million won ($96,232).

The automaker also applies the price policy to sports utility vehicles. It launched the sale of the Lexus RX400h, a hybrid SUV, which uses a dual fuel system of electricity and gasoline, this year.

The price gap for RX400hÂ’s consumer prices between Korean and American markets is also wide _ 80 million won in Korea to 43 million won ($44,700) in the U.S.

A Toyota Motor Korea official said it is illogical to compare prices in Korea with those in the worldÂ’s largest market. ``Compared with other foreign carmakers, Toyota sets car prices and auto parts prices reasonably.Â’Â’

Lexus series is one of the best-selling imported models, along with European models BMW and Mercedes-Benz, among the high-income bracket in Korea.