China car dealers cheer antitrust probe
AN ANTITRUST probe into global carmakers is being cheered on by car dealers in China, who say that companies, such as Audi and Mercedes-Benz, have been exploiting their dominance to boost profits in ways that would not be tolerated in Western markets.
Foreign brands - including Jaguar Land Rover, Volkswagen's Audi, BMW and Mercedes-Benz - are scrambling to lower prices for both new cars and spare parts in an effort to appease Chinese regulators, who have accused some of them of anti-competitive behaviour.
As well as charging higher prices in China than consumers pay elsewhere, some dealers say foreign luxury marques have been running quasi-monopolies on even generic spare parts and accessories such as tyres, engine oil and aluminium wheels.
"High-margin, new-car business pretty much dried up in China. That means if you procure other things that you sell at the dealership in the way the carmaker dictates, you cannot possibly make money," said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight.
"Carmakers slap high margins and kick up wholesale prices that dealers pay - so high that there's really no room for you, as a dealer, to play with and maximise profit."
An array of industries has been coming under the spotlight, as China intensifies efforts to bring companies into compliance with its anti-monopoly law enacted in 2008.