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from Breakingviews:

China throws weight around on car parts costs

By Ethan Bilby 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s competition watchdog has forced luxury carmakers into a U-turn. The whiff of a probe into vehicle parts was enough to get Audi and Jaguar Land Rover to reduce their prices, even though neither has been publicly deemed to be abusing its position. Experience shows in China it is better to admit guilt early than risk bigger fines, or lose access to a critical market.

Foreign companies are increasingly vulnerable to accusations of unfairly milking Middle Kingdom consumers for profit. The National Reform and Development Commission is already probing U.S. pharma groups and chipmaker Qualcomm. In auto parts, it may be onto something. The cost of spare parts for an Audi AL6 were four times the cost of a new car before the reductions, the company said. For the industry globally, the norm is around three times, according to one analyst.

China’s car industry is the world’s biggest by new vehicles sold, so the adjustment to profit isn’t small. Assuming that Audi’s parts revenue is about 5 percent of its total China turnover, Bernstein estimates an earnings impact of around 400 million euros ($537 million). That’s about 5 percent of owner Volkswagen’s 8.1 billion euro 2014 forecast net profit according to Eikon SmartEstimates.

from Breakingviews:

Beijing Motor IPO lifts bonnet on China carmakers

By Ethan Bilby 

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

Beijing Motor is offering investors a glimpse under the bonnet of the Chinese auto industry. The carmaker part-owned by Germany’s Daimler is planning a Hong Kong listing it hopes will help it cash in on China’s expanding demand for new vehicles. But its profitability depends entirely on joint ventures with foreign groups. It’s a reminder that China’s car market has two speeds.

from Breakingviews:

China’s car joint ventures aren’t built to last

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Chinese drivers are booming in number, and foreign auto companies have cruised away with most of the sales. But access to what is now the world’s largest auto market has come with a big financial concession: joint ventures with local partners. Those alliances haven’t fulfilled Beijing’s goal of developing competitive Chinese brands. That divided interest could lead to future break-ups.

from Breakingviews:

China still means the world to car makers

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China loves to do things big, and that includes buying cars. The country accounted for 85 percent of the expansion in the global automobile market last year. China’s growth may down-shift to 10 percent this year, according to consultancy IHS, as top cities introduce caps on new car-buying. Even then, it remains the world’s most important car market.

from Breakingviews:

Tyremakers’ takeover spat faces high toll

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Apollo Tyres’ spat with its U.S. target could face a high toll. The Indian firm wants to renegotiate its $2.5 billion takeover of Cooper Tire & Rubber following protracted disputes with workers in the United States and China. Cooper has gone to court to force its suitor to pay up. In this fight, a compromise looks like the least bad outcome.

from Breakingviews:

China price probes may be too much of a good thing

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s trustbusters have found their mojo. Last month, the National Development and Reform Commission fined six milk companies including Danone and Fonterra for fixing prices. Petroleum groups, telecom operators, banks and auto makers may be next to feel the heat. China needs stronger watchdogs, as long as what motivates them is a hunger for good, not a taste for glory.

from Breakingviews:

Return to glory days may elude Japan’s automakers

By Antony Currie

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

The weakening yen is good news for Japan’s automakers. The more than 20 percent drop in the currency’s value against the dollar since early October will boost profit from overseas sales - and probably market share, too. A return to the glory days of 2006, though, is likely to prove elusive.

from Global Investing:

Amid yen weakness, some Asian winners

Asian equity markets tend to be casualties of weak yen. That has generally been the case this time too, especially for South Korea.

Data from our cousins at Lipper offers some evidence to ponder, with net outflows from Korean equity funds at close to $700 million in the first three months of the year. That's the equivalent of about 4 percent of the total assets held by those funds. The picture was more stark for Taiwan funds, for whom a similar net outflow equated to almost 10 percent of total AuM. Look more broadly though and the picture blurs; Asia ex-Japan equity funds have seen net inflows of more than $3 billion in the first three months of the year, according to Lipper data.

from Breakingviews:

BYD caught in two Chinese economic traps

By Wei Gu

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Warren Buffett doesn’t usually like companies in which the top managers are selling when the share price falls. By that standard, the Omaha investor must not be too happy with his Berkshire Hathaway’s 2008 purchase of 9.9 percent of Chinese electric automaker BYD.

from Money on the markets:

BSE Auto index falls 2 pct

Auto stocks struggled in trade on Friday, as stocks like Exide Industries, M&M and Maruti Suzuki fell, pushing the sectoral index down 2 percent.

Exide Industries ended down 4.6 percent as the top loser in the auto index, followed by M&M which dropped 3.3 percent.

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