Aug 08, 2014 03:20 PM EDT
BMW Slashes Auto Part Prices in China Over Anti-Monopoly Probe

BMW has joined German auto rivals Audi and Mercedes-Benz in cutting prices of auto parts in China, where the government has complained about overcharging and launched investigations in order to expose anti-competitive behavior.

BMW had already cut prices for 3,300 square parts in China by an average of 15 percent this year. It will reduce prices for over 2,000 components by 20 percent starting on Aug. 11, the company confirmed to Reuters.

The cut is an "active response" to concerns made by the National Development and Reform Commission.

The NDRC is China's price regulator.

China is increasing its efforts to bring companies in line with its anti-monopoly law. Recently, it has handed down fines to foreign companies like Mead Johnson Nutrition Co and Danone SA.

It is already probing Microsoft and big-time automakers like Mercedes-Benz.

On Aug. 6, the NDRC said it would punish Volkswagen AG's premium brand Audi and Fiat SpA's Chrysler for their anti-competitive practices.

Fines could be up to 10 percent of their annual revenues in China, according to Chinese law.

Foreign carmakers like Audi, Chrysler, Mercedes-Benz and Jaguar Land Rover have rushed to announce price cuts in order to please 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 said that it will expand the sales channels where independent repair shops can buy the carmaker's original parts.

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

Industry experts believe automakers have too much leverage over car dealers and auto part suppliers, allowing them to control prices, considering as a violation of China's anti-trust law, according to Reuters.

German automakers account for around 70 percent of China's luxury car market. China is considered BMW's biggest global market.

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