Audi cuts spare-part prices in China amid anti-monopoly probe

Jul 27 2014, 15:03 IST
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Volkswagen AG's premium brand Audi said it would cut spare-part prices in China as global automakers rush to change their pricing strategies. (CarDekho) Volkswagen AG's premium brand Audi said it would cut spare-part prices in China as global automakers rush to change their pricing strategies. (CarDekho)
SummaryThe announcement by Volkswagen's Audi came on the heels of a move by British luxury carmaker Jaguar Land Rover to cut prices on three models in China.

Volkswagen AG's premium brand Audi said it would cut spare-part prices in China as global automakers rush to change their pricing strategies after Chinese anti-monopoly regulators began probing the auto industry.

The National Development and Reform Commission (NDRC), China's state planner, is investigating the industry amid domestic media complaints that foreign carmakers, using a dominant market position, are overcharging Chinese customers on products and spare parts.

"As a premium market leader Audi has made the price adjustments proactively," Audi said in an emailed statement over the weekend, adding the new prices will be effective Aug 1. "Audi and its joint venture FAW-Volkswagen support the efforts of the NDRC to examine the pricing in the after-sales area in China."

The announcement by Volkswagen's Audi came on the heels of a move by British luxury carmaker Jaguar Land Rover to cut prices on three models in China in response to the NDRC's probe.

Earlier this month, Daimler AG's premium brand Mercedes-Benz cut service charges and spare-part prices in China by as much as 20 percent.

China is stepping up efforts to bring companies in compliance with an anti-monopoly law enacted in 2008. In recent years, it has targeted industries ranging from drugmakers and milk powder producers to jewellers and technology firms.

The NDRC, which regulates pricing activities, has handed down record fines over the past year to a number of multinational companies including Mead Johnson Nutrition Co and Danone SA.

A senior NDRC official said in February that the pricing regulator was collecting evidence of possible anti-competitive behaviour by the country's auto parts market.

The government has also been collecting information on whether there's monopolistic behaviour by automakers in the country's vehicle market.

'LOCALIZATION MEASURES'

If Chinese regulators determine that there are anti-competitive practices in the car industry, it's not clear whether the price cuts foreign automakers are making could help them avoid penalties.

A separate statement on Audi's China website quoted an NDRC official as saying the regulator "welcomes global brands such as Audi to voluntarily make corrective measures, and hope other companies can also review their operations and actively take measures to comply with the Chinese law."

Audi said that localization measures and economies of scale allow it to "adjust" the prices for spare parts in China and pass these "cost advantages" onto customers.

Audi did not provide details of the price cuts, but said they reduce the total cost of spare parts for an Audi A6L by about 30 percent.

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