Mercedes-Benz Shanghai Office Raided By Chinese Regulators

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The office of Mercedes-Benz in Shanghai was raided by Chinese regulators as part of the government’s anti-monopoly investigation. Daimler AG (USA) (OTCMKTS:DDAIF) (ETR:DAI) owns Mercedes-Benz.

The action of the Chinese government came a day after Daimler AG (USA) (OTCMKTS:DDAIF) (ETR:DAI) announced its decision to reduce the prices of replacement components next month.

Mercedes-Benz office under investigation

Senol Bayrak, the spokesperson for Daimler AG (USA) (OTCMKTS:DDAIF) (ETR:DAI) confirmed that the Mercedes-Benz office was under investigation by Chinese regulators. According to him, “We confirm that we are assisting the authorities in their investigation,”

According to Han Weiqi, an analyst at CSC International Holdings in Shanghai commented that the timing of the investigation against Mercedes-Benz is “a bit confusing.” He suggested that regulators are probably investigating the German automaker “because the cut hasn’t met the authorities’ expectations.”

The Shanghai United Media Group reported that nine officials from the anti-monopoly division of the National Development and Reform Commission (NDRC), the economic planning agency of China made an unannounced visit to the Mercedes-Benz office in the province and interviewed staff.

Mercedes-Benz is the third largest manufacturer of luxury cars. Daimler AG (USA) (OTCMKTS:DDAIF) (ETR:DAI) recently emphasized that its decision to lower the prices of more than 10,000 products is part of its strategy to boost its competitiveness in after-sales services.

Other foreign automakers under investigation

Aside from Mercedez=s-Benz, the National Development and Reform Commission is also investigating other German automakers including Audi AG (ETR:NSU) and Bayerische Motoren Werke AG (ETR:BMW) as well as Japanese car makers to find out if these companies are inflating the prices for spare parts.

Last month, the Chinese joint venture of Audi AG (ETR:NSU) announced that it would reduce its prices by as much as 38%. Yesterday, Mercedes-Benz revealed an average of 15% price reduction.

NDRC reportedly found monopolistic practices

Today, China National Radio reported that the branch of NDRC in Shanghai and Hubei provinces found that Fiat S. p. A. (ADR) (OTCMKTS:FIATY), a division of Chrysler and Volkswagen AG (OTCMKTS:VLKAY) were engaged in monopolistic practices. The broadcaster said the automakers would be penalized in the near future, but it did not reveal the source of its information.

In response to the investigation of the NDRCV, Chrysler said its Shanghai unit is lowering the prices of 145 components by 20%. The automaker also decided to reduce the prices of its Jeep sport-utility vehicles.

Chrysler’s sales unit in China emphasized that the “voluntary, proactive price adjustments” demonstrated the company’s commitment to remain highly competitive in the market.

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