Mercedes ‘fixed prices’ in China

GERMANY’S Mercedes-Benz has been found guilty of manipulating prices for after-sales services in China‚ the official Xinhua news agency reported‚ adding to pressure on foreign car makers in the world’s largest car market.

Brands including Volkswagen’s Audi‚ BMW and Mercedes-Benz are cutting prices for new cars and spare parts in an effort to appease Chinese regulators that have accused some of them of anticompetitive behaviour.

Daimler‚ the parent company that makes the luxury Mercedes-Benz cars‚ said yesterday it was cooperating with authorities and declined to comment further.

An array of industries‚ from milk powder makers to electronics firms‚ have come under the Chinese regulatory spotlight in recent years as the government intensifies its efforts to make foreign companies comply with 2008 anti-monopoly legislation.

Antitrust regulator the National Development and Reform Commission (NDRC) launched an investigation into the car industry following domestic media complaints that foreign carmakers were overcharging Chinese customers for vehicles and spare parts.

The report‚ which cited regulators‚ made no mention of possible penalties for Mercedes. The regulator can impose fines of up to 10% of a company’s Chinese revenues for the previous year.

J P Morgan analysts said the willingness of the German manufacturers to lower prices in China reduced the possibility of high fines but could in the longer term hit profitability.

Mercedes-Benz said recently it would reduce prices on some spare parts by an average of 15% and BMW said it would cut prices by an average of 20%‚ J P Morgan said. Audi has also said it would cut prices‚ but did not specify by how much.

In the longer run‚ forcing European carmakers to lower the price of spare parts and imported vehicles could see margins in China normalise to levels currently seen in Europe‚ J P Morgan said earlier this month. – Reuters