Foreign carmakers face Beijing's probe on spares

Government said to be examining if prices of spare parts are being artificially jacked up

PUBLISHED : Saturday, 19 July, 2014, 1:58am
UPDATED : Saturday, 19 July, 2014, 1:58am

Beijing is examining whether foreign car manufacturers are preventing component makers from selling spare parts to any dealers besides those authorised by the car companies, people familiar with the matter said.

The National Development and Reform Commission, the country's apex body for economic planning, is probing practices at Germany-based Daimler's Mercedes-Benz, Volkswagen's Audi and Bayerische Motoren Werke, and Japanese carmakers to see whether prices of spare parts are being artificially boosted, they said, asking not to be identified.

Mainland state media has criticised car producers from abroad for overcharging consumers for spare parts.

The Transport Ministry released a proposal last month to encourage the "free flow of auto repair parts" and urged vehicle makers to provide original parts to independent mechanics.

BMW and Volkswagen declined to comment, while representatives at Mercedes said they were not aware of an investigation against the company.

The NDRC did not reply to a fax seeking comment.

While figures are not publicly available, the spare-parts business only makes up a small part of automakers' profit, according to John Zeng, managing director at LMC Automotive research company in Shanghai.

Any financial impact from a probe would be bigger on dealers than on car manufacturers because of their reliance on after-sales service, Zeng said.

Foreign companies from baby-food maker Danone to computer manufacturer Apple have been targeted by regulators or state media on the mainland for pricing or business practices. Qualcomm, the world's largest chipmaker for smartphones, said in November that the NDRC began a probe related to an anti-monopoly law.

Last December, state broadcaster China Central Television accused foreign automakers such as Mumbai-based Tata Motors' Jaguar Land Rover, Tokyo-based Fuji Heavy Industries' Subaru along with Audi of overcharging for spare parts. It cited the brands' monopolistic hold as the reason for the "unfair" prices.

Jaguar Land Rover said at the time that 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.

Subaru had said the price of its parts in China tends to be higher because it has no manufacturing plant in the country.

Beijing fined six dairy companies in August, including Mead Johnson Nutrition and Danone, a combined 670 million yuan (HK$841.7 million) for price fixing, a record penalty for violating anti-monopoly laws.

The Economic Information Daily reported earlier yesterday on the spare-parts probe, citing unidentified people at auto companies, the industry association and dealerships.