Case of the $48,000 K-car: Critics say Gephardt's figures don't add up

By , Staff writer of The Christian Science Monitor

They work their hearts out every day trying to turn out a good product at a decent price. Then the Korean government slaps on nine separate taxes and tariffs. And, when that government's done, a $10,000 Chrysler K-car costs $48,000 in Korea.... -From Richard Gephardt's TV commercial

This now-famous ad is credited for much of Missouri Rep. Richard Gephardt's success in early Democratic primary contests.

Now there are some doubts about whether the ad is correct. United States government documents indicate that Mr. Gephardt is miscalculating the price of the K-car in South Korea.

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Instead of the $48,100 Gephardt estimates as the price of a K-car, US officials figure the car would retail for $30,451, before adding on registration fees, a mass-transit bond, and highway taxes - the same fees any South Korean-made car would pay. After adding those taxes, the K-car would sell for $38,306.

While that may sound like a lot for a $10,000 car, it is not that high considering that the South Koreans add almost all the same taxes to their own cars. Thus, a Hyundai costing $10,000 - if there were such a car - would sell for $27,665.

The main difference between the cars is a 40 percent tariff on imported cars, which swells the expense because of the multiplier effect of taxes on a higher base. This tariff has been reduced steadily since last year and may come down again this year. Gephardt staff members could not be reached for comment about their numbers.

Chrysler Corporation says Gephardt's calculations are ``in the ballpark.'' Rather than discuss specific numbers, it says the important fact is that South Korea is encouraging exports and discouraging imports.

What Gephardt and Chrysler do not discuss, however, is that the main reason automobiles are expensive in South Korea generally is because the Koreans want to encourage savings, not consumption. South Korean and other Asian savings help fund the US budget deficit.

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