Auto makers try to reverse slower sales with incentives
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In a bid to reverse seemingly slower vehicle sales auto makers are keen to cut prices and offer incentives to lure buyers especially as the non-peak season for car purchases nears.
China's overall auto sales accelerated 34 percent in April from a year earlier, but they were slower than the 56 percent for March and 124 percent for January.
The sales also reversed by nearly 10 percent from March figures, according to the China Association of Automobile Manufacturers.
Car dealers have been offering incentives and reduced prices since April to attract buyers as they consider the approach of the non-peak season for auto purchases.
"Passenger traffic to the store has fallen since May," said Li Jiayue, a sales director of Shanghai Volkswagen's Hudong outlet. "Previously auto buyers were willing to pay extra to get early delivery but now they wait and hope for lower prices."
Market watchers said one reason for the seemingly slower sales growth could be due to the central government's winding down of incentives on vehicle purchases and increase in fuel prices. The cooling property and stock markets may also have delayed plans to buy autos.
Li said Shanghai VW has offered a 50 percent cut in the vehicle purchase tax for the 2-liter SVW Lavida sedan since May.
Elsewhere, a Honda dealership in Beijing has cut the price of a 1.8-liter Honda City sedan by 4,000 yuan (US$585), which is about 3 percent of the car price. It also offered an extra 5,248 yuan in incentives, covering auto insurance, accessories and gifts.
Dealers facing higher stocks are under pressure to move the cars.
"Last year, there was a shortage of vehicles. But now nearly all parking spaces are full," said Xu Xiancheng, an official from the auto sales association in Shanghai.
In April inventories held by car makers rose to 547,500 units nationwide, and would total around 1 million units if stocks held by dealers were included.
Xu would not be surprised if car makers were to cut output if sales in the second quarter remained flat. "Otherwise, a price war is highly expected soon," he noted.
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