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Criticisms grow as car buyers are pushed to pay more on delayed orders

Not only delivery delay, carflation is also on the way due to supply shortage, price hike in raw materials

2022 Grandeur (HMG)
2022 Grandeur (HMG)

Consumer criticisms are mounting as the country’s finished carmakers are unable to meet the delivery deadline due to ongoing supply shortages globally, as well as obligating customers to pay more to get the latest edition models. 

As carmakers like Hyundai Motor stops manufacturing the older version of vehicle when they release the new edition in the new year, customers having to wait more than a year for delivery of their cars are being pushed to buy more expensive, newer edition vehicle. 

“I purchased Volvo XC60 in last April and received a notification from the carmaker that it would take 14 months to receive my car. While I’m expecting to receive my car in June, I’m worried if I’ll have to pay more to the upgraded functions that I did not expect (following the launch of the newer edition,)” said Kim Su-jin, a 37-year-old office worker living in Seoul. 

According to the industry, customers, on average, wait for 10 to 18 months after making an order on their cars until the delivery. Considering that new edition models launch within a 12-month cycle, those who wait for more than a year have no other option but to pay more, over a price hike on raw materials such as chips and steel sheet.

The country’s largest automaker Hyundai Motor launched 2022 Grandeur earlier this week, a newer edition for this year, which is at least 880,000 won to 1.9 million won more expensive compared to the previous year’s model. There is no major change in the exterior. Functions like curtains in the back seats or safety features like highway assist have been added.

Kia has also launched the new edition of K8 earlier this month, the 2023 K8, which has become 630,000 won more expensive compared to the last year’s model. 

The price of Mercedes-Benz’ popular E-Class 250 AV has been also raised to 67.3 million won this year from last year’s 64.5 million won, about 2.8-million-won increase over a year, citing increased price in raw materials. 

“A delay in vehicle delivery mainly caused by chip shortages are making customers to carry the burden. But it’s only the beginning to see ‘carflation,‘ –- a combination of car and inflation -– as the price of new cars are expected to go even higher considering the global market situation (of supply shortages),” said Lee Dong-hon, an executive director at Hyundai Motor Group’s industry think tank HMG Business Research center. 

Carmakers say they have been seeking ways to alleviate customer burden. 

“Due to continuously rising production cost in terms of securing auto parts, we had to increase the price but to minimize the burden on customers, we added functions that can minimize the road noise as well as enhanced safety features,” Renault Korea said after unveiling the 2023 XM3. The newer edition, which cost 18.6 million won and has been released in six months, equips a new functions like lane keeping assist. The price has been increased by 1.1 million won.

Some customers even opt for getting rid of some of the functions to bring forward the delivery date. According to a Hyundai Motor dealership in Seoul, Kia’s flagship model EV6 can be received in 18 months once the order is made, but 2 to 3 months can be shortened when the option for navigation is omitted.

Meanwhile, a consumers’ association said a legal hurdle in the Korean law has led to consumers’ inconvenience.

According to Fair Trade Commission’s contract on sales of a new car, those who sell the car can deliver the vehicle to the purchaser based on the updated condition, asking customers to pay more or unilaterally cancel the contract. 

“It’s carmaker’s one-way, arrogant and authoritarian attitude towards customers because they can raise the price through small changes to the existing models like options or trim adjustment. They should take responsibility about the delay in delivery and do more than just notifying customers on raised price,” said Citizens United for Consumer Sovereignty, also asking for the change in the related law.

By Kim Da-sol (ddd@heraldcorp.com)
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