In a major setback at the end of the year, Toyota Motors will have to pay a whopping 87.6 million yuan ($12.5 million) in fines to Chinese regulators for fixing price of its premium Lexus cars in one of the provinces of the country. Toyota has already accepted the charges and acknowledged the penalty.
The decision comes as China increases scrutiny over auto sales in the country where all major global automakers have a presence and are trying to aggressively push sales to capture a bigger pie of the market. China is the largest car market in the world and has been attracting an increasing number of automakers over the past few years.
Toyota in trouble
On Friday, China's State Administration for Market Regulation said that Toyota fixed the price of its Lexus cars in eastern Jiangsu province. The country's anti-monopoly bureau said that Toyota fixed the minimum sales and resale prices of the cars in that province, which took away the pricing powers of the deals as well as harmed the rights of the customers. This was done between 2015 and 2018.
China is the biggest market for new cars but sales have been suffering lately owing to the economic slowdown in the country. The investigation revealed that despite car sales declining in China, sales of Lexus continued to jump. Toyota sold a staggering 180,200 units of new vehicles in China till November, an increase of 21% year over year.
China tightens noose on carmakers
Although, Toyota didn't say much, a spokesperson of the Japanese carmaker said that the company acknowledges and honors the decision of the State Administration for Market Regulation and respects the penalty.
China has been quite vigilant on carmakers and auto sales and the marketing and sales strategies they apply in that country. The regulators also said that Toyota fixed sales strategies and offered hefty discounts to customers while making requests to buy accessories at fixed prices.
China sold a whooping 28 million cars last year and carmakers are adopting unique strategies to woo customers. This has made the country's anti-monopoly bureau keep a close watch on foreign automakers with operating in China.
Toyota isn't the one carmaker to have been fined by Chinese regulators. Earlier this year, Changan Automobile Group, which has a joint venture with Ford, was slapped a fine of 162.8 million yuan by Chinese regulators for breaking competition and anti-monopoly rules.