* Xinhua article could be warning shot to foreign automakers
* Says some imported cars twice as expensive in China than
* Audi says taxes and other factors make prices comparable
* Analysts don't think Chinese government will take action
* China has launched price probes in other sectors
(Adds Audi statement, tariff details)
By Samuel Shen and Jonathan Standing
SHANGHAI/BEIJING, July 29 Foreign carmakers are
reaping exorbitant profits selling imported luxury cars in China
and should face an anti-trust investigation, the official Xinhua
News Agency said, in what may amount to a shot across the bow of
foreign auto firms.
Xinhua said the price of imported cars had become a
contentious topic following investigations into how foreign
companies in other sectors priced their goods.
Foreign milk formula makers and pharmaceutical companies
have come under intense regulatory scrutiny in recent weeks,
especially over pricing. Separately, Chinese police have accused
British drugmaker GlaxoSmithKline of bribery.
Analysts, however, said they did not expect foreign
carmakers to become the latest target over prices. Volkswagen's
luxury division Audi said vehicle prices in China
were comparable to other countries once taxes and other factors
were taken into account.
"Milk powder pricing is a more imperative problem, as it's
baby food and concerns ... families," said Yale Zhang, managing
director of Automotive Foresight (Shanghai) Co Ltd, a
consultancy and industry research firm.
"Luxury cars are different. Some people in China have plenty
of money and are indifferent to high pricing."
China has become a key market for the makers of luxury cars,
with 2.7 million expected to be sold each year by 2020,
overtaking the United States as the world's leader in the
The Xinhua report said some imported cars were twice as
expensive in China than in overseas markets.
It cited a man surnamed Qu who had bought an Audi Q7 in
Canada for 78,000 Canadian dollars, or about 460,000 yuan
($75,000), and who was shocked to see the same car on sale in
China for 1 million yuan.
Xinhua said similar price differences existed between some
unspecified Land Rover models made by Jaguar Land Rover
as well as the BMW X5. JLR is owned by
India's biggest carmaker by revenue, Tata Motors Ltd.
Xinhua did not make clear where it got the price information
An Audi China spokesman said in an emailed statement that
allowing for taxes and differing vehicle specifications, prices
Tariffs on cars brought into China from abroad are 25
percent for any type of car. On top that there is an additional
value-added tax of 17 percent and consumption tax, which depends
on the engine size.
"Most of the price differences between some imported models
in China and for example Germany result from import duties and
taxes in China. In addition, the entry price vehicles in China
are usually higher equipped than the base models in Germany,"
the Audi statement said.
"If you adjust the prices according to duties, taxes and
differences in equipment, price levels in China and other
markets like Germany would usually be comparable."
BMW and Tata could not immediately be reached for comment.
"30 PERCENT MORE PROFITABLE"
Selling imported cars in China was 30 percent more
profitable than the global average, Xinhua said, citing Rao Da,
secretary general of the China Passenger Car Association.
Zhang Min, president of the Waigaoqiao car supermarket in
Shanghai, was quoted as saying that while the government imposed
taxes on luxury cars, the difference between prices paid in
China and overseas amounted to "profiteering".
Rao later told Reuters he thought it was unlikely the
government would investigate the luxury car market.
"Foreign carmakers have chosen to set prices of luxury cars
excessively high in China, where the rising ranks of the rich
are willing to buy expensive foreign brands to show off their
wealth, and where there are no domestic luxury brands to compete
with," Rao said.
He added that opinions voiced in the Xinhua article might be
partly driven by the fact that some domestic automakers are
envious of the profits earned by foreign luxury brands.
Earlier this month top western milk formula makers Nestle SA
, Danone, Mead Johnson Nutrition Co
and Abbott Laboratories said they were being
investigated by China's top economic planning agency for
possible anti-trust violations.
Chinese authorities are also probing the pricing practices
at top local and international drugmakers, including units of
GlaxoSmithKline and Merck, while a number of gold shops
are also being investigated for price fixing.
GSK is also embroiled in bribery allegations after police
detained four of its Chinese executives in connection with
accusations the drugmaker funnelled up to 3 billion yuan ($489
million) to travel agencies to facilitate bribes to doctors and
officials. GSK has said some of its Chinese executives appeared
to have broken the law.
($1 = 6.1316 Chinese yuan)
(Editing by Dean Yates)