Mercedes-Benz to cut price of spare parts in China

Article by Andrew Christian, on August 7, 2014

Mercedes-Benz will trim the prices of over 10,000 spare parts in China by an average of 15 percent starting September, in response to a move by the country to further scrutiny of business practices of foreign companies. According to Mercedes, it is voluntarily cutting prices on parts for all its models in China "in response to an anti-monopoly investigation" by the National Development and Reform Commission (NDRC) into the auto industry.

Marc-Oliver Nandy, executive vice president of aftersales for Mercedes in China, said in a statement that the price cut "would further lower the usage cost” for its customers and would improve the carmaker’s competitiveness in the after-sales market.

The carmaker recently said it would trim service charges and corresponding spare part prices. Audi has also decided to lower the prices of spare components and aftersales services in China while Jaguar Land Rover intends to trim prices on three car models.

Frank Biller, an analyst at LBBW, remarked that the car fleet in China is relatively young, so the spare-part business is smaller than in saturated markets. He noted that lower component prices will have limited impact on Daimler’s profits.

The pressure on carmakers is part of a wider bid by China to enforce anti-monopoly legislation that took effect in 2008. In July, regulators launched an anti-monopoly probe into Microsoft Corp.

Prior to that, regulators have launched probes against several industries like pharmaceuticals, milk-powder producers, jewelers and technology firms. Regulators have been imposed large fines on multinationals like Mead Johnson Nutrition and Danone. [source: Reuters]

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