The China Automobile Dealers Association (CADA) is undertaking an investigation into the pricing of overseas car brands in Mainland China.
CADA, in association with the National Development and Reform Commission, China’s top economic planner, will conduct the investigation into “unreasonable pricing and excessive profits”. The probe will focus on costs, profit margins and taxes of foreign automakers operating in China.
News of the pricing probe comes hot on the heels of the biggest NDRC fine in history – nearly 670m yuan ($108m) – to six non-Chinese baby milk powder companies accused of price fixing and anti-competitive practices.
Luxury brands may face the harshest scrutiny, as segment-wide high prices could be in breach of China’s anti-monopoly laws. Although CADA deputy secretary general Luo Lei claims the investigate is purely routine, expensive foreign brands in China have been a particular focus of attention for regulators.
Recently, The Wall Street Journal compared the prices of three luxury cars sold in the US with those in China and found the Chinese prices to be on average 64% more expensive than their American counterparts. Even after accounting for consumption taxes and VAT, the three vehicles were still 37% pricier in China, the newspaper claimed.