Daimler suspends Mercedes franchise in China after customer complaint goes viral

FILE PHOTO: A Mercedes Benz logo is pictured at a Mercedes Benz branch in Stuttgart, Germany, April 15, 2019. REUTERS/Ralph Orlowski/File Photo

BEIJING (Reuters) - Germany’s Daimler has suspended a local sales franchise for its Mercedes-Benz brand in China after a customer complaint about service from the dealership went viral on social media.

Daimler said in a statement on Tuesday that the dealership in Xi’an city in the northwestern province of Shaanxi had reached an agreement with the customer and was investigating its customer service and business operations, and had suspended the franchise in the meantime.

It made no further comment about the move, which came after a video emerged on Chinese social media showing an unhappy Chinese customer protesting at a dealership, and which also prompted a critical response from regulators.

In the video, the customer complained that a car she had recently bought was leaking oil and that she was subsequently treated poorly by the dealer, highlighting poor consumer rights in the world’s second largest economy.

She also said she had paid a “financial service fee” of 15,000 yuan ($2,235) to an employee at the dealership when she bought the car.

China’s banking and insurance regulator has asked Mercedes-Benz’s car finance unit to investigate its dealership arrangements, state media said on Tuesday.

Car dealers should not be allowed to collect so-called financial services fees and should make efforts to protect customers’ rights, China National Radio quoted Pang Xuefeng, an official from China’s Banking and Insurance Regulatory Commission, as saying.

Reporting by Min Zhang and Sun Yilei in Beijing and Lee Chyen Yee in Singapore; Editing by David Holmes