China has fined General Motors’ Chinese venture $29 million in accusations of monopolistic price fixing after many reports that the China has plans to crack down on a specific—though yet unnamed—US automaker.
Citing the internal Shanghai pricing regulation authority, SAIC General Motors Corp. had reached a monopoly agreement with its local dealers to set a floor on prices for car models like the Buick Excelle, the Cadillac SRX, and Chevrolet Trax. The fine, they say, is thus equivalent to 4 percent of all affected models’ sales revenue over the course of the previous year.
SAIC General Motors Corp., of course, is a 50-50 joint venture between GM and SAIC Motor Corp., which is the largest auto maker in China (by sales). In China, foreign companies are required to tie up with a local company; they can’t just come in and set up shop.
In response to this move, GM has released a statement: “GM fully respects local laws and regulations wherever we operate. We will provide full support to our joint venture in China to ensure that all responsive and appropriate actions are taken with respect to this matter.”
This, of course, has hit GM where it hurts, as shares tumbled nearly 4 percent on December 14 when state media said that China did, in fact, intend to slap monopoly fines on this “unnamed” US automaker. Today, General Motors shares fell another 0.1 percent before the opening bell.
General Motors has quite a lot to lose in China, of course, where it sells more vehicles than it actually does in the United States. As a matter of fact, GM car sales continue to rise in China, with Chinese consumers nabbing 3.4 million GM cars over the first 11 months of this year, alone. That is an impressive jump of 8.5 percent over the same period last year. Indeed, China is the world’s largest auto market and that 3.4 million (from this year) accounts for more than one-third of GM’s entire vehicle sales across the globe.
China has also imposed similar fines on other foreign auto manufacturers. This includes: Daimler, Nissan (NSANY) and Volkswagen’s Audi unit (VLKAY).