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Mercedes-Benz to offer tax refunds to S. Korean customers

All News 16:40 March 04, 2016

SEOUL, March 4 (Yonhap) -- The local unit of German carmaker Mercedes-Benz in South Korea has decided to offer tax refunds to its customers in line with the government's recent move to extend a tax cut for car purchases, company officials said Friday.

This is an about-face from its earlier stance of being unwilling to provide any refunds, claiming that they were already reflected in its ramped-up promotion and deep price cuts granted in January.

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 promoted 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.

Controversy is growing as major foreign brands claim 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. They also argue that their customers were well notified.

Customers counter that they were not fully aware of it. Some are even pushing to file a class-action lawsuit against the foreign carmakers, saying that they were cheated by false and exaggerated advertising.

Complaints seem to be growing further as local carmakers such as Hyundai Motor Co. and Kia Motors Corp. are pushing to give refunds to customers in line with the extended tax cut.

Mercedes-Benz's move will likely prod other foreign brands, including Volkswagen, to follow suit, as they are under mounting pressure from customers, market observers said.


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