Spotlight on profits of foreign carmakers
Print Edition
Foreign carmakers are reaping exorbitant profits selling imported luxury cars in China and should face an anti-trust investigation in what may amount to a shot across the bow of foreign auto firms.
Xinhua news agency said the price of imported cars had become a contentious topic following investigations into how foreign companies priced their goods.
Foreign milk formula makers and pharmaceutical companies have come under intense regulatory scrutiny in recent weeks, especially over pricing. Separately, Chinese police have accused British drugmaker GlaxoSmithKline of bribery.
Analysts, however, said they did not expect foreign carmakers to become the latest target over prices. Volkswagen’s luxury division Audi said vehicle prices in China were comparable to other countries once taxes and other factors were taken into account.
“Milk powder pricing is a more imperative problem, as it’s baby food and concerns ... families,” said Yale Zhang, managing director of Automotive Foresight (Shanghai) Co Ltd, a consultancy and industry research firm.
“Luxury cars are different. Some people in China have plenty of money and are indifferent to high pricing.”
China has become a key market for the makers of luxury cars, with 2.7 million expected to be sold each year by 2020, overtaking the United States as the world’s leader.
The Xinhua report said some imported cars were twice as expensive in China than in overseas markets.
It cited a man who had bought an Audi Q7 in Canada for C$78,000, or about 460,000 yuan (US$75,000), and who was shocked to see the same car on sale in China for 1 million yuan.
Xinhua said similar price differences existed between some Land Rover models made by Jaguar Land Rover as well as the BMW X5. JLR is owned by India’s Tata Motors Ltd.
An Audi China spokesman said that allowing for taxes and differing vehicle specifications, prices were comparable.
Tariffs on cars brought into China from abroad are 25 percent for any type of car. On top that there is an additional value-added tax of 17 percent and a consumption tax based on the engine size.
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