China Antitrust Probe Targets Foreign Carmakers

US carmaker General Motors (GM) said that it has been contacted by the Chinese authorities as part of a broadening antitrust investigation into foreign manufacturers.

The announcement followed one by Germany’s Audi, a unit of Volkswagen, which said that in Hubei province the dealership network of its Chinese joint venture, FAW-Volkswagen had broken national antitrust rules and would be punished by the government.

The venture “has closely cooperated with the investigation and will accept a penalty,” the statement said, adding that, “management processes in the sales and dealership structure are getting improved to prevent similar incidents in the future.”

The Chinese authorities have reportedly been reviewing other foreign motor groups, focusing on whether they have made their dealers set high, standardised prices for replacement parts.

In April, the Insurance Association of China (IAC) and the China Auto Maintenance and Repair Association (CAMRA) suggested that replacing each part in a Mercedes C-Class sedan would cost Chinese consumers 12 times as much as buying a new car.

Daimler, the German manufacturer, said that it would cut the price of Mercedes-Benz repair parts sold in China by an average of 15%, in response to antimonopoly investigations of the industry that culminated last week in a raid on the group’s Shanghai offices.

GM has responded to criticism of its replacement part prices by stating that the cost of replacing the parts in a Cadillac was typically 330% of the price of a new model; for Buicks 284%; and for Chevrolets, 265%.

GM’s main Chinese subsidiary, Shanghai General Motors, said that it had been supplying information to the National Development and Reform Commission (NDRC), China’s main economic planning agency.

“Since 2012, Shanghai General Motors has always actively supported and cooperated with all the surveys and research work carried out in the auto industry by NDRC’s price monitoring and antimonopoly bureau,” the company’s statement read.

Reports suggest that the high prices in China for parts largely reflect the steep taxes that China imposes on cars. These include a value-added tax (VAT) of 17%, an import tax of 25% and a consumption tax based on engine displacement that can be up to 40% of the sales price for cars and sport utility vehicles with large engines.

However, regulators have discouraged car manufacturers from pointing out the high taxes in the price information given to consumers, who often see only the overall price of a vehicle.


Related reading