China is examining whether foreign automakers are preventing component makers from selling spare parts to any dealers besides those authorized by the car companies, people familiar with the matter said.
The National Development and Reform Commission, China’s economic planning body, is probing practices at Daimler AG’s Mercedes-Benz, Volkswagen AG’s Audi, Bayerische Motoren Werke AG and Japanese automakers to see whether prices of spare parts are being artificially boosted, asking not to be identified because the probe hasn’t been made public.
BMW declined to comment, while representatives at Volkswagen and Mercedes said they couldn’t immediately comment. NDRC didn’t reply to a fax seeking comment.
Chinese state media has criticized foreign automakers for overcharging consumers for spare parts. China’s transport ministry last month released a proposal to encourage the “free flow of auto repair parts” and urged automakers to provide original parts to independent mechanics.
While figures aren’t publicly available, the spare-parts business only makes up a small part of automakers’ profits, according to John Zeng, managing director at LMC Automotive in Shanghai. Any financial impact from a probe would be bigger to dealers than the automakers because of their reliance on after-sales service, Zeng said.
Foreign companies from baby-food maker Danone to Apple Inc. have been targeted by regulators or state media in China on pricing and business practices. Qualcomm Inc., the world’s largest chipmaker of smartphones, said in November the NDRC began a probe related to an anti-monopoly law.
Last December, state broadcaster China Central Television accused foreign auto brands such as Tata Motors Ltd.’s Jaguar Land Rover, Fuji Heavy Industries Ltd.’s Subaru and Audi of overcharging for its spare parts. It cited the brands’ monopolistic hold as the reason for the “unfair” prices.
Jaguar Land Rover said at the time it abides by China’s laws and determines pricing based on market conditions, while Audi said it applies the same standards for pricing of spare parts worldwide, and Subaru said the price of its parts in China tend to be higher because it has no manufacturing plant in the country.
China also fined six dairy companies including Mead Johnson and Danone a combined 670 million yuan ($110 million) for price fixing, a record penalty for violating anti-monopoly laws, in August last year.
The Economic Information Daily earlier reported on the probe, citing unidentified people at auto companies, the industry association and dealerships.
© Copyright 2021 Bloomberg News. All rights reserved.