Communists Accuse Lexus Of Price Fixing

China and Japan have a complicated history dating back centuries. In somewhat more recent times, Japan was notoriously cruel towards China during World War II. Today, however, China has become a global economic powerhouse while Japan, though still a vital player, has a far smaller role. The tables have turned. Reuters reports that China's market regulator late last week fined Japanese automaker Toyota $12.5 million for price-fixing on its Lexus luxury vehicles in the Chinese province of Jiangsu.

According to China's anti-monopoly bureau, between 2015 and 2018, Lexus set a minimum sales and resale price for its cars in the eastern Jiangsu province and doing so deprived dealers of pricing autonomy and further harmed customers' rights. Lexus is also being accused of fixed sales strategies over that same time period, such as offering customers discounts while also asking them to purchase accessories at fixed prices.

This sales tactic is actually fairly popular among individual dealers in China but authorities don't like it when automakers do it. Toyota, as it turns out, is not fighting the Chinese authority's decision but rather accepts it and will most likely payout. It doesn't have much of a choice.

This year has so far been a good year for Lexus in China with a total of 180,200 vehicles sold in the first 11 months, a 21 percent increase from 2018. Interestingly, as auto sales in China are declining, Lexus' sales are growing.

Although it's still not nearly as popular as German luxury brands like Audi, BMW, and Mercedes-Benz, Lexus sales have surpassed Cadillac, Jaguar Land Rover, Infiniti, and Volvo. One of the most Lexus' most popular models in China is the ES sedan, which has doubled its monthly sales since last year. Over 9,000 ES sedans have been sold in China each month since last April. Lexus simply can't afford not to be in the Chinese market at this rate, hence its decision to accept the fine and adjust its sales practices.