China state TV accuses foreign carmakers of price gouging

By Kazunori Takada and Samuel ShenReuters

China's state television accused foreign carmakers of charging domestic customers more for repair costs than in other markets, singling out Audi, Subaru and Jaguar Land Rover Ltd in the latest of a series of programs targeting foreign firms.

The investigative report by China Central Television (CCTV), aired on Wednesday evening, also said that many of the foreign auto makers' dealers were reluctant to repair parts, often insisting on more expensive replacements.

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The program said it was based on interviews with customers and workers at service workshops designated by foreign automakers.

It cited a tail door for a Land Rover model as being sold at around 24,100 yuan ($4,000) at an official service shop, compared with 8,500 yuan in the black market. It did not give a comparative price in other countries or specify what it meant by the black market.

"By setting ridiculously high prices, China has become the 'treasure bowl' for global carmakers," the report said, adding foreign auto makers were abusing their monopoly of sales channels.

It noted, however, that import and other duties were partly responsible for pushing up prices.

Responding to the CCTV report, Jaguar Land Rover, owned by India's Tata Motors Ltd, said its pricing was in line with Chinese regulations.

"As to the component maintenance cost with imported vehicles, JLR China has been strictly abiding by relevant laws and regulations in China, and has determined pricing with consideration of market conditions," Jaguar Land Rover (JLR) China said in a statement emailed to Reuters.

A spokesman at Subaru in Tokyo, the automaker unit of Fuji Heavy Industries Ltd, declined to comment about the CCTV report. Officials at Audi, owned by German automaker Volkswagen AG, said they were looking at issuing a statement later in the day.

The report coincides with a crackdown by Chinese authorities on what they perceive to be inflated prices and monopolistic behavior by companies.

The China Automobile Dealers Association told Reuters in August that its officials were collecting data on the price of all foreign cars sold in the country for the National Development and Reform Commission, one of China's price regulators.

CCTV often airs programs targeting well-known global companies. Earlier this year, it accused Apple Inc and Samsung Electronics Co Ltd of unfair service practices, and Starbucks Corp for over charging.

The accuracy of some of the broadcaster's recent reports has, however, been called into question.

Last week, China's state tax bureau said a legal misunderstanding was behind the tussle between property developers and CCTV after the state broadcaster reported that the firms owe massive sums in unpaid land taxes.

The State Administration of Taxation did not directly name CCTV but said "estimates" of huge amounts of unpaid land appreciation taxes were not accurate.

Many bloggers on Sina Weibo, China's version of Twitter, said the foreign carmakers were justified in charging higher prices and the issue of higher taxes could not be ignored.

"Even though they charge so much, they sell so well," wrote a blogger who goes by the name 'First Sunlight'.

"If they charge reasonable prices, our domestic companies will go bankrupt. They have the ability to charge high prices." ($1 = 6.0916 Chinese yuan)

(Additional reporting by Norihiko Shirouzu in BEIJING; Editing by Miral Fahmy)