Daimler Cuts Mercedes-Benz Parts Prices in China Amid Probe

Aug 04, 2014 7:23 am ET

(Updates with BMW’s comment in seventh paragraph.)

Aug. 4 (Bloomberg) -- Daimler AG plans to cut spare-part prices for its Mercedes-Benz cars in China by an average 15 percent as of next month amid a government investigation into whether automakers manipulated prices.

The reductions will include more than 10,000 products covering all Mercedes-Benz models, with a 29 percent decrease on windshields, the Stuttgart, Germany-based manufacturer said in a statement yesterday. The move will improve the carmaker’s competitiveness in after-sales services, it said.

Daimler has joined Volkswagen AG’s Audi brand in lowering the cost of spare components and after-sales services as China steps up scrutiny of the business practices of foreign companies. Chinese regulators last month opened an anti-monopoly investigation into Microsoft Corp. and state media accused Apple Inc. of using its iPhone to steal state secrets.

“The Chinese car fleet is relatively young, so the spare- part business is smaller than in saturated markets,” Frank Biller, a Stuttgart-based analyst at LBBW, said by phone. “The direct impact of lower component prices on Daimler’s profits will be limited.”

Starting Sept. 1, Mercedes will “take the initiative to adjust the prices of some spare parts” in response to the National Development and Reform Commission’s investigation, Daimler said. “The latest move by Mercedes-Benz in the area of after-sales will provide a more attractive after-sales service experience for Chinese consumers.”

Servicing Savings

Mercedes had already put a program in place enabling customers to save as much as 20 percent on the cost of getting their cars serviced.

The NDRC, China’s top economic planning body, is probing practices at Mercedes-Benz, Audi, Bayerische Motoren Werke AG and Japanese carmakers to see whether prices of spare parts are being artificially boosted, people familiar with the matter said in mid-July.

BMW, the world’s biggest maker of premium vehicles, is in talks with the Chinese regulatory body about reducing prices for components, said Mathias Schmidt, a spokesman at the Munich- based company who declined to specify what’s being discussed. BMW had already cut what it charged customers in China for spare parts in the first half of 2014, he said.

China is BMW’s biggest national market, generating about 20 percent of the carmaker’s annual revenue.

Some automakers have lowered prices after “they were contacted” by Chinese officials, China Daily reported on July 29, citing Xu Kunlin, director of the NDRC’s bureau of price supervision and anti-monopoly. Xu didn’t provide names of the suspected monopolies, the report said.

Audi’s Chinese joint venture said in late July that the Ingolstadt, Germany-based brand would lower replacement costs of its parts by as much as 38 percent on Aug. 1.

--With assistance from Dorothee Tschampa in Frankfurt and Elisabeth Behrmann in Munich.