Flipping BMWs in China Under Federal Investigation

When you’re selling a the same car in a country for a 1/3 of the price you’re selling it for in another country, things are bound to deviate from the original plan in a jiffy. Add the fact that the two countries are easily connected by shipping containers in the mix and you’ll get plenty of headaches and ingenious ways to counter the pricing scheme.
BMW X5 Prices in the US and China 1 photo
Photo: WSJ
That’s exactly what is currently happening with BMWs in the US an China right as we speak. The German company has been criticized for the way it’s selling cars on various markets before but, as Wall Street Journal’s Andrew Grossman reports, “they are entitled to set prices differently in different markets.”

The act of flipping a BMW is quite simple: you buy a car from the US for a third of the price you’d usually have to pay in China (for example a BMW X5 xDrive35i starts at $56,025 in the US and $153,175 in China) and the simply ship it over to Asia and claim a lot more for it.

The practice is illegal, as you probably already guessed, and federal prosecutors are currently targeting shipments of dozens of high-end cars at ports around the US, looking for frauds of millions of dollars, as WSJ reports.

Since stopping the phenomenon might take a while (laws aren’t clear on the matter at the moment) it seems like China itself will have to take matters into its own hands and demand similar prices for similar products from the companies that want to sell in their own backyard. China Ministry of Commerce spokesman Shen Danyang said on Friday that some revisions of current regulations were necessary so BMW and other manufacturers might expect some legal measures to be taken against them.
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