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China regulator questions Toyota Lexus division over parts pricing - sources

Published 16/09/2014, 08:19
© Reuters A security guard is reflected in the logo of a Toyota Motor Corp's Lexus car at the company's showroom in Tokyo
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By Norihiko Shirouzu

BEIJING (Reuters) - China's price regulator has summoned executives from Toyota Motor Corp (T:7203) over pricing policies and practices for spare and replacement parts at its luxury Lexus division, people with direct knowledge of the matter said.

The questioning coincided with the first-ever punishments of foreign automakers for price-fixing this month, when fines were imposed on the Chinese venture of Volkswagen AG (DE:VOWG_p) and the China sales unit of Fiat's (MI:FIA) Chrysler.

A slew of antitrust investigations that encompass a wide range of firms including Microsoft Corp (O:MSFT) and chipmaker Qualcomm Inc (O:QCOM) has prompted complaints from foreign officials and the business community that foreign firms are being targeted unfairly.

According to three China-based Toyota executives, the National Development and Reform Commission (NDRC) this month summoned Beijing-based executives at Lexus for questioning.

Two of the executives, who declined to be named because of the sensitivity of the subject, said the NDRC questioned the Lexus leaders about the brand's spare and replacement parts policies, including pricing.

Takanori Yokoi, a Beijing-based Toyota spokesman, declined to comment on the information provided by the sources, but said Toyota would cooperate with Chinese authorities if there was an investigation into anti-competitive matters.

Officials at the NDRC could not be reached for comment.

PROBE ESCALATED

The summoning of Lexus China executives escalates the NDRC's probe into Toyota.

Earlier this year, the anti-trust regulatory unit of NDRC made initial enquiries about the brand's auto parts policies via the China Automobile Dealers Association (CADA), Toyota executives familiar with the matter have said, adding that the association has been conducting an industry-wide survey since April.

Two of the executives with information about the NDRC's latest move said it is looking into pricing policies and practices of the Japanese luxury brand in the south China province of Guangdong.

It appears the regulator is trying to build a case against Lexus for engaging in price-manipulation in connection with spare parts, they said.

But they added that it did not seem that a fine on Lexus was imminent.

"As far as I know and at this point, there is no imminent action on us," one of the executives who spoke with Reuters said. "It's been very quiet."

Last week, Hubei province's price bureau said it would fine the sales unit of Volkswagen's (DE:VOWG_p) joint venture FAW-Volkswagen Automobile Co Ltd 249 million yuan ($40.6 million) for fixing Audi prices. The NDRC's Shanghai branch also fined the China sales unit of Fiat's (MI:FIA) Chrysler 32 million yuan for operating a price monopoly.

Other global automakers being probed for possible anti-competitive behavior include Daimler's (DE:DAIGn) Mercedes-Benz and Tata Motors Ltd's (NS:TAMO) Jaguar Land Rover.

In response to the CADA survey, Toyota's legal department in Beijing provided over the summer written answers and evidence in "several thick binders," according to Toyota officials. The survey was capped by a visit by a CADA official to Lexus's office in Beijing late July.

Lexus sold about 73,000 vehicles in China last year. The vehicles are imported from Japan and other countries.

© Reuters. A security guard is reflected in the logo of a Toyota Motor Corp's Lexus car at the company's showroom in Tokyo

(Reporting by Norihiko Shirouzu; Editing by Kazunori Takada and Edwina Gibbs)

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