China Investigates Foreign Car Pricing

The National Development and Reform Commission wants the data to check whether foreign car makers are manipulating prices or setting minimum retail prices for dealers, Luo Lei, a deputy secretary-general of the China Automobile Dealers Association said Wednesday. Such activities would be illegal, he said.

"The NDRC is checking price information in a variety of industries and the auto sector is just one of the industries," Mr. Luo said.

It isn't clear whether the data the auto association said it was collecting on behalf of the NDRC would result in a full investigation. Officials at the NDRC on Wednesday didn't immediately respond to a request for comment.

Popular foreign auto makers in China such as General Motors Co., Volkswagen AGVOW3.XE -0.92% and Nissan Motor Co. 7201.TO -0.38% said they didn't have an immediate comment.

Chinese authorities in recent weeks have announced investigations into pricing of foreign products. The Administration of Industry and Commerce, which oversees marketing and antitrust issues, has been seeking information from a number offoreign drug companies. The inquiry follows a criminal investigation by Chinese law enforcement into allegations of bribery by GlaxoSmithKline PLC. The U.K. drug maker has said some executives in China may have violated Chinese law and company policy, and it said it is cooperating.

Foreign infant formula makers such as Mead Johnson Nutrition Co. and Abbott Laboratories cut prices of some of their baby formula brands sold in China following an investigation. Last week the NDRC fined six dairy companies 669 million yuan ($109 million) for anticompetitive practices.

"I think China's antimonopoly scrutiny will be extended to more and more profitable industries, such as car manufacturing and baby formula," said Tang Zhihua, an attorney and senior partner at AllBright Law Offices studying monopoly practices in China.

The CADA, which is composed of members ranging from dealers, sales departments of car manufacturers to makers of auto parts, started collecting the information last year, said Mr. Luo. The data collection covers all foreign cars including imported cars and locally built vehicles by joint ventures, but not Chinese indigenous brands, he added.

"The focus of the data collection falls on whether foreign car makers are setting minimum retail prices for cars sold in China," said Mr. Luo, adding the data collection is still under way.

Reuters reported the probe in the Chinese car market on Tuesday.

According to the semiofficial China Association of Automobile Manufacturers, foreign car makers had a 65% share of China's passenger vehicle market in July, up from 53% at the end of last year.

Foreign auto makers have already been under fire in China. In March, state-run China Central Television accused Volkswagen AG of selling cars in the country with substandard direct-shift gearbox systems, causing acceleration problems and car accidents for an unspecific number of customers. VW recalled more than 380,000 vehicles following the CCTV report.

Last month the official Xinhua News Agency accused foreign car makers of pocketing massive profits by dominating the Chinese market, inflating prices and controlling the sale of auto parts. The report noted that the prices of some luxury cars in China can be double or even triple what they are overseas, and accused some of marking up prices ahead of the cars' arrival in China.

Mr. Luo at the CADA said that the price difference is the result of a combination of factors such as China's robust demand for luxury cars, the country's various taxes on imported cars and a stronger position of foreign car makers than local dealers in pricing.