
Toyota faces a massive 87.6 million yuan fine for Lexus price-fixing in China
- Chinese regulator announces a massive 87.6 million yuan fine on Toyota for price fixing.
- Toyota was involved in price fixing on its Lexus vehicles from 2015 to 2018 in Jiangsu area.
- Toyota Lexus's spokesman commented that the penalty is accepted and respected.
- Lexus achieved a 21% increase in sales this year compared to 2018.
- Ford Motor and Changan Automobile Group joint venture was also fined 162.8 million yuan in June.
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As per Chinese regulations, price-fixing for auto manufacturers is frowned upon as it deprives the dealers of the autonomy of charging prices that meet their standards of feasibility and help improve sales. The regulation states it to be harmful to dealers and customers alike.
In the wake of the regulation, Chinese authorities have recently imposed a massive 87.6 million yuan of fine on one of the leading Japanese automobile manufacturers, Toyota Motors. Toyota was found in violation of the regulation as it practices price-fixing on its luxury line of vehicles, Lexus. As per the report, the manufacturer indulged in such practices in the Jiangsu area from 2015 to 2018.
Toyota Robbed The Dealers Of Their Right To Practice Price Autonomy
Copy link to sectionBeing the world’s largest market for automobiles, the move mirrors China’s determination to regulate the automobile industry further. China’s State Administration for Market Regulation has a dedicated anti-monopoly bureau that promotes fair competition. According to the bureau, Toyota announced a predetermined price for sales and resales of its vehicles that disabled dealers to practice price autonomy while hurting customers’ rights as well.
In order to boost its sales in China, Toyota deployed price-fixing on Lexus vehicles that saw discounted prices for customers, all the while demanding additional payments for accessories, on the other hand. Such a strategy, as per the analysts, is acceptable for the dealers but is frowned upon in China when practiced by an auto manufacturer.
Toyota Lexus’s spokesman commented that the penalty is accepted and respected, but didn’t add much more to his statement.
Toyota Noted A 21% Increase In Sales In 2019
Copy link to sectionWith a decline in worldwide car sales, Lexus adopted this strategy to ensure it met a minimum standard of revenue and kept its growth spurt going. While car sales remained challenged in China as well, Lexus achieved a 21% increase in sales this year compared to 2018. This can be attributed to the company’s carefully crafted pricing and marketing strategies.
The fine on Toyota isn’t, however, the only one of its kind. Chinese regulator had also announced a massive 162.8 million yuan fine on the joint venture of Ford Motor and Changan Automobile Group in June, citing violation of anti-monopoly law.
Following the news, Toyota’s stock dropped from 7,770 JPY on Friday to 7,733 JPY where it closed for the week. Toyota has gained a little over 20% in the stock market in 2019.
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