BMW dealers fined for price fraud

Four BMW dealerships in central China's Hubei Province yesterday became the first in the sector to be punished for monopolistic practices, local authorities said.

The companies were found guilty of price fraud by charging fees for pre-delivery inspections (PDI), the Hubei Price Bureau told a meeting attended by almost 20 dealerships representing different auto brands.

Each of the four sales outlets was fined between 150,000 yuan (US$24,400) and 937,900 yuan, the bureau said.

Providing a pre-delivery inspection is part of the responsibility of carmakers and dealerships, the bureau said.

Though the cost of the inspections is often covered by the carmaker, it is not uncommon for dealerships to pass on the charge to the consumer.

But putting a price tag on a PDI misleads consumers into thinking it is part of the after-sales service, the bureau said.

"A small number of dealerships formed a price alliance by aligning their PDI charging standards directly or indirectly, which led to price manipulation and market order disruption, and harmed the rights of consumers and other market players," it said.

"It is a violation of China's anti-monopoly law and anti-price monopoly provision."

The bureau added that an investigation into Audi's monopoly practices has now entered the stage of determining administrative penalties.

The German luxury car brand, which along with Chrysler was last week found guilty of anti-competitive practices by the National Development and Reform Commission, could face a fine of up to 1.8 billion yuan based on the upper penalty — of 10 percent of its previous year's sales revenue — allowed by law. Both companies had earlier announced price cuts in response to the anti-monopoly investigation.

On Monday, BMW lowered the wholesale prices of more than 2,000 spare parts by an average of 20 percent, after reducing the cost of more than 3,300 parts by 15 percent over the past seven months.

At the start of the month, Audi cut the price of selected spare parts by 38 percent.

Mercedes-Benz, which is still under investigation, recently cut its spare part prices by up to 29 percent.

Last week, the National Development and Reform Commission said it was ready to issue penalties against 12 Japanese firms that produce auto parts and bearings after being found guilty of monopolistic practices.