Toyota Motor Corporation (TM - Analyst Report) is reducing the price of the spare parts for its Lexus vehicles in China from Sep 1, 2014. The company will lower the price of almost 15,000 parts, which includes a cut of 35% in radiator parts prices and 30% in engine and transmission prices. On an average, the prices of the spare parts will be reduced by 26%.
The cutback was announced in response to the National and Development Reform Commission’s (NDRC) antitrust probe in the auto industry. Notably, the body is concerned about the pricing practices prevalent in the industry. It reported that 12 Japanese auto parts manufacturers indulged in price fixing and has therefore, imposed fines of 1.24 billion yuan ($200 million) on them.
Apart from Toyota, Audi, BMW, Daimler AG's Mercedes-Benz, Jaguar Land Rover, Chrysler and Honda Motor Co. (HMC - Analyst Report) have also lowered the price of their vehicles or spare parts recently. The NDRC had recently contacted General Motors Co.’s (GM - Analyst Report) Chinese joint venture (JV) as part of the investigation.
The JV between General Motors and the state-owned Shanghai Automotive Industries Corp. — the Shanghai General Motors — sells vehicles under Buick, Cadillac and Chevrolet brands. Shanghai General Motors focuses on supplying high-quality products and services which conform to national regulations and policies. The automaker stated that the prices of vehicles and components in China are on par with that in the U.S. or Europe. All the components required for a car, if purchased separately in China, would cost about 265% to 330% of the price of a whole vehicle. Meanwhile, the same would cost 300% of the vehicle price in the American and European markets.
Toyota currently carries a Zacks Rank #2 (Buy).