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UPDATE 1-China queries Toyota's Lexus in industry probe - executives
August 8, 2014 / 12:35 PM / 3 years ago

UPDATE 1-China queries Toyota's Lexus in industry probe - executives

(Adds comment from Lexus president)

By Norihiko Shirouzu

SHANGHAI, Aug 8 (Reuters) - Executives at Toyota Motor Corp said the Chinese government is taking an "initial" look into the auto parts policies of its premium brand Lexus as regulators conduct probes into possible monopoly behaviour across the industry.

Two Beijing-based Toyota executives said the National Development and Reform Commission (NDRC) is making initial enquiries about Lexus via the China Automobile Dealers Association (CADA), which has been conducting an industry-wide survey since April.

Nearly all of the survey questions were focused on Lexus's spare and replacement parts policies, including pricing, the executives said.

"At one point during the long process of answering all questions in the survey, CADA people told us the regulators mean business this time, and told us to take the survey seriously," one of the executives said.

China is ramping up efforts to bring foreign companies into compliance with an anti-monopoly law enacted in 2008, having taken aim at industries as varied as milk powder and jewellery. Regulators have recently widened their probes to sectors including pharmaceuticals, electronics and autos.

Earlier this week, Chinese regulators said they would punish Volkswagen AG's Audi brand and Fiat SpA's Chrysler for monopoly practices, potentially paving the way for the automakers to be fined up to 10 percent of their local annual revenue in the world's biggest car market.

THICK BINDERS

According to the two executives, Toyota's legal department in Beijing has provided written answers and evidence in "several thick binders". The survey was capped by a visit by a CADA official to Lexus's office in Beijing last month, they said.

The executives said their understanding is that CADA earlier this year had sent similar surveys to a dozen other foreign brands operating in China.

"In our case, the inquiry focused on spare parts. They asked about our spare parts prices, whether or not dealers are able to procure spare parts from any supplier, among other things," said one of the two Toyota executives, both of whom asked not to be identified because the inquiry is ongoing.

"Our guess is that they wanted to make sure we're not too tightly controlling provision of spare parts to dealers, making sure dealers are allowed to buy spare parts not just from Lexus but other sources."

Tokuo Fukuichi, President of Lexus International and a Director of Toyota, told reporters in Japan that the automaker would cooperate with Chinese authorities.

"I have heard that our Chinese office is handling queries from the authorities," he said at Toyota's Miyata plant in southern Japan but declined to comment further.

Earlier this week, Daimler AG's Mercedes-Benz unit said it was cooperating with China's anti-monopoly authorities over an investigation into unspecified matters, after Chinese media reported the German carmaker's Shanghai office had been raided.

Lexus brings in from Japan and elsewhere outside China all of the vehicles it sells in China. Last year, it sold about 73,000 vehicles. (Additional reporting by Maki Shiraki in Miyawaka, Japan; Editing by Ryan Woo and Jane Merriman)

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