Editor’s note: China’s attack on Apple over the last few years has been well documented, and this year’s apparent banning of Microsoft’s Windows 8 at government agencies has further fuelled speculation about the government’s motives and whether the punishing of successful, foreign companies was part of a move to give Chinese companies an advantage in their home market. However, China’s focus on foreign companies is not limited to software and technology: a new anti-monopoly probe launched earlier in the year has cast its focus on the automobile market, particularly luxury foreign car manufacturers. This translated article sheds light on the current situation.

As well as  blocked Google IP addresses, revelations about privacy breaches with Apple, investigating the “monopoly” of Microsoft, and the removal of “Symantec and Kaspersky” from its list of security software suppliers, China has begun to initiate a new wave of attacks, this time on the luxury car industry. According to an August 5 report on cnr.cn, the National Development and Reform Commission will punish Chrysler and Audi for “monopolistic behavior”; whether Mercedes is also under attack remains to be confirmed.

Photo: pedrosimoes7

China’s car industry has welcomed an unprecedented price consolidation storm, with numerous car manufacturers adjusting the prices of their finished vehicles and parts under the pressure of a new “anti-monopoly” probe. At present, Mercedes, Chrysler, Audi, Jaguar Land Rover and others have already lowered the prices of their parts and have responded to the NDRC’s anti-monopoly investigation. However, BMW has yet to react.

What’s more, the Shanghai Municipal Development and Reform Commission and Hubei Province Price Bureau’s investigation into Chrysler and Audi is coming to an end. Both companies have been found to display clear signs of monopolistic practices. For example, Audi’s 4S stores in Hubei Province have unified prices for spare parts and maintenance. And in Shanghai, Chrysler has displayed similar problems. These two companies will face fines in the near future. Last week, the Jiangsu Province Price Bureau allegedly began investigating Mercedes retailers in five cities including Suzhou, Wuxi and Danyang.

Foreign car manufacturers respond to the probe

According to an official announcement by Volkswagen, from August 1 onwards, they will begin to adjust the price of domestic manufactured spare parts and “the difference in retail price between spare parts and whole cars” will be reduced; this does not include imported car models. To take the China-made A6L Audi as an example, this model’s ratio between “parts and whole” has dropped from 411% to 291%. Consumers’ usage and maintenance expenses will be lowered.

In May, Chrysler also announced a price adjustment in a number of its by-products and spare parts.  The warranty price of 145 types of high-value parts will be lowered by 20%, while the flagship Jeep Grand Cherokee SRT8 will be lowered by 65,000 RMB (1 RMB is approximately 0.16 USD) and the Jeep Cherokee 5.7L version by 45,000 RMB.

In May, the Mercedes-Benz retail company officially announced that in reaction to the anti-monopoly investigation, the company will be lowering the price of parts worth 10,000 RMB and over from September 1 onwards, totaling an average price reduction of 15%. Even though the price margin is decreasing, some industry insiders believe that there is still room to drop the prices further. Jaguar Land Rover China will adjust the manufacturer's suggested retail price of the Land Rover Range Rover 5.0L V8 engine version as well as the Jaguar F-Type convertible, with an average price reduction of 200,000 RMB. The lowest price of the Jaguar F-Type convertible will drop to around 500,000 RMB and the lowest price of the Land Rover Range Rover will decrease from 1.98 million to 1.78 million RMB.

The monopolistic behavior of imported car manufacturers is judged by the following criteria: automakers have too much leverage over car dealers and auto part suppliers, enabling them to control prices. This time the focus of the anti-monopoly investigation has been on spare parts and maintenance fees at 4S stores as well as on the supply channels of spare parts in the after-sales market. Another issue is the fact that luxury cars in China cost, on average, 2.5 to three times more than in the US. The aim of this anti-monopoly probe is to eliminate the "horizontal and vertical restraints as well as the abuse of market dominance and other alleged monopolistic behavior."

Source: china.dwnews.com

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Keywords: China anti monopoly car manufacturers Anti Monopoly Crack down China