A photo of KTX, a high-speed train, manufactured by Hyundai Rotem. Korea Times file
By Lee Kyung-min
The price of KTX high-speed trains operated by KORAIL has spiked 49 percent over the past six years, due to what one opposition lawmaker characterized as the result of a monopoly over the public transit market engineered by Hyundai Rotem, a railway vehicle manufacturing affiliate of Hyundai Motor Group.
Rep. Choi In-ho of the Democratic Party of Korea said the demands of the Hyundai affiliate on price hikes is almost always met due to a lack of healthy competition in the market, a chief driver of chronic losses at national railway operator.
New market players should be nurtured and allowed to enter the lucrative market, the lawmaker said, to prevent collusion, delays in orders and price increases, all of which are shouldered by taxpayers.
Data cited by Choi showed the contract amount between KORAIL and the Hyundai affiliate over 84 KTX bullet trains came to 387.7 billion won ($269 million) in 2021, up from 268.8 billion won in 2016.
The difference of 118.9 billion won is explained by a per-car price increase of 1.41 billion won, due to the unit price spiking 43 percent over the past five years.
Similarly, the per-car price of the EMU-320 model stood at 5.6 billion won as of July, up 49 percent from 1.8 billion won six years ago.
KORAIL initially sought separate purchases of the EMU-320 models, 16 last year and the remaining 120 cars this year.
However, it ended up issuing an order total of 136 cars this year, months after last year's contract fell through after KORAIL rejected Hyundai's proposed price tag of 7.07 billion won per train. The price was up 91.6 percent from 2016.
Hyundai Rotem issued a statement denying claims that the delays in constructing the KTX railway departing from Incheon and Suwon, Gyeonggi Province are due to the firm's refusal to seek bidding.
This was to counter claims made by Rep. Heo Jong-sik of the DPK, a member of the National Assembly Transport Committee, that the firm did not take part in bidding because the price and the number of trains ordered are too low.
"We feel deeply sorry for the inconveniences to the residents in Incheon and Suwon, but the prices of cars are closely tied to the numbers ordered," it said.
"Our business by nature is determined largely by market demand at the time of an order. The unit cost dramatically increases unless we receive orders on the principle of economy of scale."
