BMW cuts auto part prices in China amid anti-monopoly probe

By Samuel Shen and Fayen Wong, Reuters

Posted at Aug 08 2014 02:38 PM | Updated as of Aug 08 2014 10:38 PM

SHANGHAI - BMW joined its German rivals Audi and Mercedes-Benz in cutting prices of auto spare parts in China, where the government has complained about overcharging and launched probes to expose what it describes as anti-competitive behavior.

BMW, which has already cut prices for 3,300 spare parts in China by an average of 15 percent this year, will further reduce prices for over 2,000 components by 20 percent starting Aug. 11, the company said in an e-mailed statement on Friday.

The price cut is in "active response" to concerns expressed by the National Development and Reform Commission (NDRC), China's price regulator, BMW said.

China is ramping up efforts to bring companies in line with its anti-monopoly law. In recent years, it has slapped foreign companies including Mead Johnson Nutrition Co and Danone SA with hefty fines. It is currently probing Microsoft Corp and carmakers including Mercedes-Benz.

The NDRC said on Wednesday that it would punish Volkswagen AG's premium brand Audi and Fiat SpA's Chrysler for their anti-competitive practices. The fines could be up to 10 percent of their annual revenues in China, according to Chinese law.

Foreign carmakers including Chrysler, Audi, Mercedes-Benz and Jaguar Land Rover have in recent weeks rushed to announce price cuts to appease Chinese regulators.

"Recently, NDRC's Price Supervision and Anti-Monopoly Bureau expressed great concerns over problems in the auto industry and the after-sales market," BMW said.

"BMW has been paying close attention, and in response, is making the effort to bring down wholesale prices and promoting the flow of original parts."

BMW will expand the sales channels where independent repair shops can buy the carmaker's original parts, addressing criticism that carmakers don't allow components to be sold outside their authorised dealershops.

Foreign luxury brands have frequently been criticized by the state media in China for inflating car and spare part prices and overcharging customers, and have been the focus of an anti-monopoly probe that started in late 2011.

Industry experts say automakers have too much leverage over car dealers and auto part suppliers, enabling them to control prices, considered as a violation of China's anti-trust law.

German brands account for about 70 percent of China's luxury car market. China is BMW's biggest global market.