China investigating carmakers over pricing

SHANGHAI/BEIJING - A Chinese automotive association is collecting data on the price of all foreign cars sold in the country for a government agency.

The China Automobile Dealers Association (CADA) has been doing the research for the National Development and Reform Commission (NDRC) since last year, said Luo Lei, deputy secretary-general of the association.

Luo said the NDRC was investigating whether carmakers were setting a minimum retail price for dealers in China, which lawyers said could contravene the country's 2008 anti-monopoly law. The world's largest auto market is a key source of revenue for many foreign companies and such scrutiny would be unwelcome.

The NDRC, which is responsible for enforcing anti-trust rules on pricing, declined to comment according to Reuters' report.

Executives at foreign carmakers said they were not aware of any research being conducted by CADA, which represents car dealers across China, or an investigation by the NDRC.

Xinhua news agency said in an editorial late last month that foreign carmakers were reaping exorbitant profits selling imported luxury cars in China and should face an anti-trust investigation.

It said some imported cars were twice as expensive in China than in overseas markets. Among those it singled out were Volkswagen's luxury division Audi and BMW.

Foreign carmakers and their local partners control around three-quarters of the overall Chinese market. Imports are generally luxury vehicles, accounting for 5.7 percent of total car sales last year.

China has become a key market for luxury carmakers, with 2.7 million expected to be sold each year by 2020, overtaking the United States as the world's leader in the segment.

Setting a suggested retail price by carmakers is a common practice in China, the United States and other major markets. But the NDRC has shown it will go after companies that fix prices.