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"The Mercedes-Benz female car owner's rights defending incident" continues to ferment

2019-04-17 16:11 Wednesday

A video showing a woman sitting on the bonnet of a car in the Mercedes showroom went viral in China recently. In the video, a woman angrily accusing sales staff of dodging her demands for a replacement. The woman, surnamed Wang, has said she purchased a new CLS 300 coupe from an authorized Mercedes-Benz dealer in the northern city of Xi'an only to discover afterward that it was leaking oil on the showroom floor even before she drove it out of the dealership.

In the 18-min's settlement negotiation audio, Ms. Wang alleged that she was asked to pay 1,5200 RMB for a so-called Mercedes finance service fee, which she thought is utterly illegal and unreasonable.

The Mercedes-Benz female car owner’s rights defending incident continues to ferment

A finance service fee, as an unwritten rule, is exposed to the public for the first time.

There are 3 financial models within China's auto financial industry: auto loan, auto financial leasing, and auto company financing, which is Ms. Wang's choice. However, none of the existing legislation support the legality of the finance service fee.

China's Consumer Protection Law stipulates that a consumer shall have the right to know of the true facts concerning the commodities purchased or used or the services received; a consumer shall have the right to a free choice in purchasing commodities or services. China's Administration for Auto Sales also stipulates that dealers shall transparently price the auto, parts and other related products as well as service, any extra fees or add-on price are utterly banned. In other words, the finance service fee is illegal.

Actually, there was a legal case on the illegality of finance service fee in Hefei, Anhui province before. In that case, the industrial and commercial bureau of Hefei confiscated the finance service fee, which is judged as illegal gains, and imposed a 430 thousand RMB administrative fine on the auto sale company.

But why Mercedes 4S store still charges the finance service fee with knowing its illegality? Industry insiders revealed that salesperson in the 4s store can gain 50% or more of the finance service fee, which is hardly resistant to them.

Over the past few decades, China's auto finance leasing industry has witnessed a fast development, and Chinese government also introduces favorable policies for the industry. To date, the value of China's auto finance market has exceeded 220 billion RMB, and the market is expected to keep growing at a CAGR of 20% in the next 3 years. The auto financing industry, which is regarded as a new growth engine of the auto industry, flourished even when the auto market is shrinking.

Although the auto finance market expands these years, problems including consumer rights violation and high complaint costs have exposed to the public.

Mr. Wang's complaint lets the public realize that there is still a long way to go in the legislation of China's auto finance market. In some sense, the future of the auto finance market is up to the protection of consumer rights.

Administration department in Xi'an has asked the 4s store to handle the complaint legally and fairly, and ensure Ms. Wang's rights are well protected.

Ms. Wang's complaint has set alarm bells ringing for all the players within the auto finance market. So what should the market players do to better protect consumers' rights, complete market legislation and avoid similar case?

All these questions will be answered in the 12th China Leasing Summit 2019 and 4th China Automobile Aftermarket Summit 2019, which are held on June 20-21, 2019. Leaders and experts from China Association of Automobile Manufacturers, China Banking and Insurance Regulatory Commission, JD, Harmony Auto, and Huangsheng auto will attend the event and exchange their opinions on China's auto leasing market.

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