China: car dealers applaud regulators’ investigation image

The anti-monopoly investigation started by China’s National Development and Reform Commission (NDRC), has prompted seven global automakers to lower prices of services, vehicles or spare parts.

Following complaints and media reports that Chinese consumers pay much more than Western buyers the state planner started an anti-trust investigation into the automotive industry. The overcharging accusations were proven so far in one instance (Audi’s local sales network), while the other foreign brands committed to voluntarily cut prices.

“High-margin new car business pretty much dried up in China. That means if you procure other things you sell at the dealership the way the automaker dictates, you cannot possibly make money,” said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight. “Automakers slap high margins and kick up wholesale prices dealers pay – so high that there’s really no room for you as a dealer to play with and maximize profit.”

Car dealers in China have now voiced their satisfaction towards the ongoing antitrust probe, saying foreign carmakers exploited their sales dominance and monopolistically boosted their profits. According to some dealers, the brands also ran monopolistic practices even on generic spare parts and accessories, such as alloy wheels, tyres or engine oil.

Via Reuters