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Chinese anti-monopoly regulators investigate Shanghai-GM

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Shanghai GM, General Motors’ main China joint venture has been contacted by Chinese anti-monopoly regulators as part of an investigation of the industry. GM’s announcement follows government announcements that Audi and Chrysler will face unspecified penalties for violating the country’s anti-monopoly law. Mercedes Benz, Toyota’s Lexus luxury brand and Japanese parts suppliers also are under scrutiny.

Regulators have launched a series of anti-monopoly probes of global automakers and technology suppliers, prompting suggestions Beijing is trying to force down prices.

Regulators have yet to disclose the basis of their investigation but industry analysts say they might be motivated by complaints about high prices for imported luxury vehicles and replacement parts.

“Since 2012, Shanghai GM has actively responded to and coordinated with the anti-monopoly bureau in its investigative and research work,” said a Shanghai GM statement.

It gave no indication whether the company is under investigation for possible violations.

Shanghai GM is a joint venture between Detroit-based GM and state-owned Shanghai Automotive Industries Corp. It sells under the Buick, Cadillac and Chevrolet brands.

Global automakers in China usually prohibit suppliers that provide components to their local factories from selling to other retailers. That control over supplies allows automakers to charge prices that industry analysts say can be many times the cost of production.

In its statement, Shanghai GM said the ratio between prices of vehicles and of components in China is about the same as that in the United States or Europe, suggesting its parts are not overpriced.

It said components that make up a vehicle purchased separately in China would cost a total of 265 to 330 percent of the price of a whole vehicle. It said that compared with a 300 percent ratio in American and European markets.

As for imported vehicles, after Chinese taxes are taken into account, prices are “relatively reasonable,” the statement said.

Via: ABC News.

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1 COMMENT

  1. “… Beijing is trying to force down prices.”
    Can’t say I blame them, since on average the price foreign automakers charge is more than twice what it is in Europe or the U.S..
    And so what GM is basically saying about “ratio’ is that, if we overcharge you for the vehicle, then we need to overcharge you for components as well.

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