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China cracks down on Chrysler

by Bill Cawthon on


For a government that has an interesting concept of patent and copyright law when it comes to native companies, the Chinese are quick to accuse foreign industries of monopolistic trade practices.

The National Development and Reform Commission (NDRC), China’s six-year-old antitrust agency, has announced it will “punish” Chrysler for anti-competitive behaviors. The penalty could be as high as 10% of Chrysler total annual sales in China.

At issue is the fact that premium vehicles (Chrysler and Jeep are considered premium in China) can cost 2½ to 3 times what they sell for in other markets.

While Chrysler and other automakers argue that China’s tariffs and taxes are largely responsible for the price differential, the company says it is cooperating with government officials and has already made significant reductions in the prices of vehicles like the Jeep Grand Cherokee as well as adjusted pricing for about 150 replacement parts.

China exacts a 25% tariff on imported automobiles as well as a VAT and other taxes that add another 17%. On top of that, Jeep was one of the brands hit with an “anti-dumping” duty of 18%.

Unlike other manufacturers, Fiat Chrysler doesn’t get a significant share of its worldwide sales from China. Total sales in 2013 were about 130,000 vehicles, including the locally-produced Fiat Viaggio and Ottimo, both clones of the Dodge Dart.

Volkswagen’s upscale Audi subsidiary was also named in the same action and the government is reportedly investigating Daimler AG’s Mercedes-Benz.

Some industry watchers see this latest action as a warning shot across the auto industry’s bow. BMW and Jaguar Land Rover have already adjusted prices, even though neither has been named as a NDRC target.

“The purpose is to maintain a sound competitive order in the auto market and protect consumer interest,” said NDRC spokesman Li Pumin. Pumin was quoted in a Reuters’ report of the action.

It’s also possible to see this as the Chinese government’s attempt to blackmail automakers into reducing prices. China has become the world’s largest automotive market and hasn’t yet missed an opportunity to flex its muscle.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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