Profit Control

Under Pressure From China, BMW Joins Daimler, VW to Cut Auto Parts Prices

BMW models at a Beijing auto show, April 2014. Source AFP
BMW models at a Beijing auto show, April 2014.
  • Why it matters

    Why it matters

    China’s competition authorities are calling on automakers to lower auto parts prices in China. German car makers are starting to cut parts prices and adjusting to a less profitable outlook.

  • Facts


    • In 2014, 44 percent of all cars produced worldwide will be sold in China and the United States. Five years ago this figure was 35 percent.
    • The market for cars in China is growing three times as fast as in the United States.
    • Chinese competition authorities are clamping down on western firms selling expensive goods in China.
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For German auto makers, China once seemed like a source of endless profit. But this may be coming to an end as firms find they can no longer set their own rules.

China’s regulatory authorities are calling on foreing automakers doing business in the country to cut their prices for spare parts amid  regulatory scrutiny of into alleged  price-fixing by German and other foreign automakers.

The National Development and Reform Commission, the Chinese competition regulator, searched Mercedes-Benz’s offices in Shanghai last week as part of an investigation and another probe into Audi’s Chinese operations is underway.

BMW has responded by cutting the prices of its components by a fifth, the Bavarian automaker said.

“In the first half of August, the company will adjust prices for more than 2,000 further products, such as generators and batteries, by an average of 20%,” a BMW spokesperson said in a telephone interview.

BMW had already cut the prices of more than 3,300 spare parts in China by an average of 15 percent, according to the spokesperson. Prices for 108 components, such as engine and electronic parts, were reduced by between 20 and 50 percent, the spokesperson said.

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